Question

How much will you have in 8 years if you invest $7500 at 4% compounded semi-annually

Answer 1

$10,295.89

Explanations:

The formula for calculating the compound interest is given as show below

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

where

• P is the, principal ,= $7500

,

• r is the, rate =, 4% = 0.04

,

• t is the, time ,= 8 years

,

• n = 2 (compounding time)

Substitute the parameters into the formula

`\begin{gathered} A=7500(1+(0.04)/(2))^(2(8)) \\ A=7500(1+0.02)^(16) \\ A=7500(1.02)^(16) \\ A=7500(1.3728) \\ A=\$10295.89 \end{gathered}`

Hence the amount it will cost after 8 years if you invest $7500 at 4% compounded semi-annually is $10,295.89