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Shane invested $3,500 in a savings account that pays 4% interest semiannually (every 6 months). How much money will he have in his account in 5 years?

A) $4,076.04
B) $4,403.92
C) $4,542.80
D) $4,688.56

1 Answer

1 vote

Final answer:

To calculate Shane's account balance after 5 years with a 4% semiannual interest rate, the compound interest formula is used, giving a result of $4,266.465, which does not match any of the given answer choices.

Step-by-step explanation:

The question asks us to calculate the future value of an investment with compound interest. Shane invested $3,500 in an account that pays 4% interest semiannually. To find out how much money he will have in his account in 5 years, we can use the compound interest formula: A = P(1 + r/n)^(nt), where:

  • P is the principal amount ($3,500)
  • r is the annual interest rate (0.04 for 4%)
  • n is the number of times interest is compounded per year (2 for semiannual)
  • t is the time in years (5)

The calculation would be as follows:

A = $3,500(1 + 0.04/2)^(2*5)

A = $3,500(1 + 0.02)^(10)

A = $3,500(1.02)^10

A = $3,500(1.21899)

A = $4,266.465

However, this amount does not match any of the answer choices provided, suggesting there may be a miscalculation or the options given are incorrect. Please double-check the interest rate, compounding frequency, timeframe, or the choices provided.

User David Jarrin
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