Question

How much interest will an account earn if you deposited $515 at the end of every six months for 7 years and the account earned 6.75% compounded semi-annually? Round to the nearest cent

Answer 1

To calculate the interest earned on the account, we can use the formula for compound interest. In this case, the account will earn approximately $957.96 in interest.

Step-by-step explanation:

To calculate the interest earned on the account, we can use the formula for compound interest:

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

Where:

• A is the final amount in the account
• P is the initial deposit
• r is the interest rate (6.75% or 0.0675 as a decimal)
• n is the number of times interest is compounded per year (2 because it's compounded semi-annually)
• t is the number of years

In this case, P = $515, r = 0.0675, n = 2, and t = 7. Plugging these values into the formula, we get:

A = 515(1 + 0.0675/2)^(2*7)

Calculating this, we find that the account will earn approximately $957.96 in interest. When rounded to the nearest cent, the interest earned is $957.96.