Question

Suppose that 2000 is invented at a rate of 3.5%, compounded semiannually. Assuming that no withdrawals are made, find the total amount after 4 years. Do not round any interminate computations, And round your answer to the nearest cent.

Answer 1

$2,297.76

Explanation:

Present value: P = 2000

Future value: F

Annual interest rate: r = 3.5% = 0.035

Time: t = 4 years

Number of compounding periods per year: n = 2

`F = P(1 + (r)/(n))^(nt)`

`F = 2000(1 + (0.035)/(2))^(2 * 4)`

`F = 2000(1 + 0.0175)^(8)`

`F = 2000(1.0175)^(8)`

`F = 2000(1.148881783)`

`F = 2297.76`

Answer: $2,297.76