Question

Lyla invests $2,500 into a savings account

which earns 5% per year. In 15 years, how
much will Lyla's investment be worth if interest
is compounded semiannually (twice a year)?
Round to the nearest dollar.

Answer 1

The formula for compound interest is given by:

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

Where:

A = the amount of money accumulated after n years

P = the principal (initial investment)

r = the annual interest rate (as a decimal)

n = the number of times the interest is compounded per year

t = the number of years

In this case, P = $2,500, r = 0.05 (since 5% = 0.05), n = 2 (since interest is compounded semiannually), and t = 15. Substituting these values into the formula, we get:

A = 2500(1 + 0.05/2)^(2*15)

A ≈ $5,551.33

Therefore, Lyla's investment will be worth approximately $5,551.33 after 15 years if interest is compounded semiannually.