Question

If $2,500 is deposited at the beginning of every six months into an account that earns 8%compounded semiannually, find the amount after 5 years.

Answer 1

Given

Principal = P = $2500

Rate = r = 8% = 0.08

Time = t = 5 years

compounded semiannually, n = 2

So, the amount will be = A

`A=P\cdot(1+(r)/(n))^(n\cdot t)`

Substitute with the given values of P, r, and t

So,

`A=2500\cdot(1+(0.08)/(2))^(2\cdot5)=2500\cdot1.04^(10)=3700.61`

So, the answer will be

The amount after 5 years will be = $3700.61