Question

Merle Fonda opened a new savings account. She deposited $40,000 at 10 percent compounded semiannually. At the start of the fourth year, Merle deposits an additional $20,000 that is also compounded semiannually at 10 percent. At the end of 6 years, the balance in Merle's account is:

Answer 1

$98,636.72

Explanation:

Answer 2

From the start to the end of the 3rd year:
A = P * ( 1 + 0.05 )^6
A = 40,000 * 1.05^6 = $53,603.83
+ $20,000
----------------------
$73,603.83
At the end of the 6th year:
A = 73,603.83 * 1.05^6 = $98,636.16