Question

Little Miss Buffet takes all the money from her piggy bank and puts it into a savings account at her local bank. The bank promises an annual interest rate of 2.5% on the balance, compounded semiannually. How much will she have after one year if her initial deposit was $200?

A. $205.00
B. $205.01
C. $205.02
D.$205.03

Answer 1

A = p (1+r/n)^ntp - initial amount which is 200

r - interest rate which is 0.025 written in decimal form

n - is the number of compounding a year, in this case is 2 because it's every six monthand

t is the year which is one in your case

A = 200 (1 + 0.025/2)²

your answer is D) 205.03