Question

Start of QuestionsCompound Interest: Suppose $1,100 is invested in a savings account that pays 3% compounded semiannually, how much is in the account at the end of 1 1/2 years?There is $ ? in the account after 1 1/2 years.

Answer 1

Step-by-step explanation:

The amount in the account can be calculated as:

`A=P(1+r)^t_{}`

Where P is the initial amount, r is the interest rate and t is the number of times the interest is compound. In 1 1/2 years, the interest is compound 3 times because it is compound every 6 months.

Then, replacing P by 1,100, r by 3% = 0.03 and t by 3, we get:

`\begin{gathered} A=1100(1+0.03)^3 \\ A=1100(1.03)^3 \\ A=1100(1.0927) \\ A=1201.99 \end{gathered}`

therefore, there is $1202 in the account after 1 1/2 years.