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Jacob deposited $3,750 into an account that pays 3.6% interest

compounded semi-annually. How much is in the account after 6
months?

User Uni Le
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1 Answer

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Final answer:

After 6 months, there will be $3,817.50 in Jacob's account, which is calculated using the compound interest formula for the principal amount of $3,750, at a semi-annual interest rate of 3.6%.

Step-by-step explanation:

When Jacob deposits $3,750 into an account with a 3.6% interest rate compounded semi-annually, we need to calculate the amount in the account after 6 months. Since the interest is compounded semi-annually, it is compounded twice a year. However, since we are only looking for the amount after 6 months (half a year), we will use the formula for compound interest but only for one period of compounding.

The compound interest formula is A = P(1 + r/n)^(nt), where:

  • A is the amount of money accumulated after n periods, 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 for, in years.

In this case, P is $3,750, r is 0.036 (3.6% as a decimal), n is 2 (since the interest is compounded semi-annually), and t is 0.5 (representing 6 months as half a year).

Now, we substitute these values into our formula:

A = $3,750(1 + 0.036/2)^(2*0.5)

A = $3,750(1 + 0.018)^1

A = $3,750(1.018)

A = $3,817.50

So, after 6 months, there will be $3,817.50 in Jacob's account.

User UshaP
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