Question

Sharon Nguyen has $25,000 to invest and believes that she can earn 6% compounded semiannually. Find the compound amount if she invests for 2 years

Answer 1

Given:

`\begin{gathered} P=\text{ \$25,000} \\ r=\text{ 6\%}=(6)/(100)=0.06 \\ n=2(compounded\text{ semiannually)} \\ t=2\text{years} \end{gathered}`

To get the compound amount, we use the amount formula;

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

Substituting the values given into the formula,

`\begin{gathered} A=25000(1+(0.06)/(2))^(2*2) \\ A=25000(1+0.03)^4 \\ A=25000(1.03)^4 \\ A=25000*1.03^4 \\ A=28137.72 \\ \\ \text{Hence,} \\ A=\text{ \$28137.72} \end{gathered}`

Therefore, the compound amount, if she invests for 2 years, is $28137.72