Question

If a savings account of 5300 thousand is compounded semi-annually at 19.18 percent annual interest, how much will the account be worth in 6 months if there are 365 days in a year and 30 days in a month?

Answer 1

To find the value of the account in 6 months, you can use the formula for compound interest. The account will be worth approximately $5,811,370.00.

Step-by-step explanation:

To find the value of the account in 6 months, we need to use the formula for compound interest:

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

Where:

• A is the future value of the account
• P is the principal amount
• r is the annual interest rate
• n is the number of times interest is compounded per year
• t is the time in years

Plug in the given values:

• P = $5300 thousand = $5,300,000
• r = 19.18% = 0.1918
• n = 2 (semi-annually)
• t = 6 months = 6/12 = 0.5 years

Now, we can calculate the future value of the account:

A = $5,300,000(1 + 0.1918/2)^(2 * 0.5)

Simplifying:

A = $5,300,000(1.0959)^(1)

A ≈ $5,811,370.00