Question

Martha invests $7800 in a new savings account which earns 5.1% annual interest, compounded semi-annually. What will be the value of her investment after 5 years? Round to the nearest cent.

A) $9,822.67
B) $9,652.43
C) $9,518.36
D) $9,365.42

Answer 1

To calculate the value of Martha's investment after 5 years, we can use the compound interest formula.

Step-by-step explanation:

To calculate the value of Martha's investment after 5 years, we can use the compound interest formula:

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

Where:

• A is the final amount
• P is the principal amount (initial investment)
• r is the annual interest rate (in decimal form)
• n is the number of times interest is compounded per year
• t is the number of years

Plugging in the given values, we have:

A = 7800(1 + 0.051/2)^(2*5)

Simplifying the equation, we get:

A ≈ $9,822.67

Therefore, the value of Martha's investment after 5 years is approximately $9,822.67, so the correct answer is A) $9,822.67.