Question

Bill Jensen deposits $8500 with Bank of America in an investment paying 5% compounded semiannually. Find the interest in 7 years

Answer 1

The principal is given as $8500 , rate is 5 percent compounded semi-annually and time is 7 years.

To determine the interest ,

Use the formula

`A=P+I`

First determine the amount,

`A=P(1+(r)/(n))^(nt)`
`A=8500(1+(5)/(100*2))^(2*7)`
`A=8500(1+0.025)^(14)=8500*1.025^(14)`
`A=12010.28\text{dollar}`

Then the interest is determined as

`12010.28=8500+I`
`I=12010.28-8500`
`I=3510.28dollar`

Hence the interest in 7 years is 3510.28 dollar.