Question

suppose that you have a savings account with 8500 in it. it pays 7% interest compound as shown below. find the value for the next 4 years semiannually

Answer 1

Statement Problem: Suppose that you have a savings account with 8500 in it. it pays 7% interest compound as shown below. find the value for the next 4 years semiannually.

Solution:

The compound interest formula is;

`\begin{gathered} A=P(1+(r)/(n))^(nt) \\ \text{Where;} \\ A=\text{final amount} \\ P=\text{initial savings balance} \\ r=\text{interest rate} \\ n=number\text{ of times interest applied per time period} \\ t=number\text{ of times period elapsed} \end{gathered}`

Thus, the parameters given are;

`P=8,500,r=0.07,n=2,t=4,A=?`

Then, the amount is;

`\begin{gathered} A=8,500(1+(0.07)/(2))^(2(4)) \\ A=8500(1.035)^8 \\ A=8500(1.3168) \\ A=11192.88 \end{gathered}`

Hence, the amount is 11,192.88.