Question

In order to pay for college the parents of a child investment $10,000 in a bond that pays 10% interest compounded semi annually how much money will this be in 16 years round your answer to the nearest cent

Answer 1

Use the next formula:

`A=P(1+(r)/(n))\placeholder{⬚}^(nt)`

A is the final amount after t years

P is the principal amount

r is the interest rate in decimal form

n is the number of times interest is compound

t is the time in years

For the given situation:

`\begin{gathered} P=10,000 \\ r=0.1 \\ n=2 \\ t=16 \\ \\ A=10,000(1+(0.1)/(2))\placeholder{⬚}^(2*16) \\ \\ A=10,000(1+0.05)\placeholder{⬚}^(32) \\ \\ A=10,000(1.05)\placeholder{⬚}^(32) \\ \\ A=46,649.41 \end{gathered}`Then, In 16 years the bond will be worth $46,649.41