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Suppose that $4000 is placed in a savings account at an annual rate of 6.2% compounded semiannually. What will be the final amount after one year?

a) $4248
b) $4249
c) $4250
d) $4251

1 Answer

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Final answer:

The final amount after one year in an account with $4000 at a 6.2% annual interest rate compounded semiannually will be approximately $4251.84, so the correct answer is d) $4251.

Step-by-step explanation:

To determine the final amount in a savings account with an initial principal of $4000, an annual interest rate of 6.2% compounded semiannually after one year, we can use the formula for compound interest:

A = P(1 + r/n)nt

Where:

  • A is the amount of money accumulated after n years, including interest.
  • P is the principal amount (the initial amount of money).
  • r is the annual interest rate (decimal).
  • n is the number of times that interest is compounded per year.
  • t is the time the money is invested or borrowed for, in years.

Plugging the values into the formula:

A = 4000(1 + 0.062/2)2×1 = 4000(1 + 0.031)2 = 4000(1.031)2

A = 4000 × 1.062961 = $4251.84

The final amount after one year will be approximately $4251.84. Therefore, the correct answer is d) $4251.

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