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7 votes
FIND THE AMOUNT TO WHICH $8000 WILL HAVE GROWN AT THE END OF 5 YEARS IF INTEREST IS 10% COMPOUNDED SEMI-ANUALLY?

User Martijn Pieters
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1 Answer

25 votes
25 votes

The $8000 will have grown to $13,031.16 at the end of 5 years.

To find out how much that 8000 has grown to, we can use the formula for compound interest:

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

A is equal to the total amount (principal + interest)

P = principal or starting amount

r = annual interest rate

n = compound frequency (i.e. how often it is compounded)

t = time (years)

For this question, our principal amount is $8000, the interest rate is 10%, or simply 0.1, the number of compounding periods is 2 since it is semi annually, and the number of years is 5. We can plug in these values into the equation to get the following:

A = 8000*(1 + 0.1/2)^(2*5)

A = 13,031.16

User Jessica Rodriguez
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3.0k points
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