Question

The amount to which $5,000 would grow in ten years at 6% compounded semiannually.

Answer 1

A=p(1+i/k)^kn
A=5000(1+0.06/2)^2*10
A=9,030.56

Answer 2

Amount = $ 9030.56

Explanation:

Given: Principal value, P = $ 5000

Rate, R = 6%

Time, T = 10 years

To find: Amount when compounded semiannually

Semiannual means half yearly which implies interest to be calculated twice in a year.

`\implies R=(6)/(2)=3` %

n ( no. of times interest to be applied ) = 2 × 10 = 20

using compound interest formula of calculating amount we get,

`A=P*(1+(R)/(100))^n`

`A=5000*(1+(3)/(100))^(20)`

`A=5000*((103)/(100))^(20)`

`A=5000*1.80611123467`

`A=9030.55617335`

⇒ A = $ 9030.56

Therefore, Amount = $ 9030.56