Question

If you deposit $5000 into an account paying 8.25% annual interest compounded

semiannually, how much money will be in the account after 15 years? round your answer
to the nearest penny/hundredth

Answer 1

1571862.11penny

Explanation:

The formula for calculating the compound interest is expressed as;

A = P(1+r/n) ^nt

Given

Principal P = $5000

r is the rate = 8.25% = 0.0825

t is the time = 15 years

n is the time of compounding = 6/12 = 1/2

Substitute

A = 5000(1+0.0825/0.5)^0.5(15)

A = 5000(1+0.165)^7.5

A = 5000(1.165)^7.5

A = 5000(3.1437)

A = 15,718.6

hence the amount of money in the account after 15years is $15,718.6211 which is 1571862.11penny