Question

Jimmy invests $4,000 in an account that pays 5% annual interest, compounded semiannually. What is his balance at the end of 10 years?

Answer 1

Answer:

The balance after the end of 10 years is $6,554.47

Step-by-step explanation:

The amount after t years is given as:

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

Principal, P = $4000

Interest rate, r = 5% = 5/100 = 0.05

Number of times compounded annually, n = 2

Time, t = 10 years

`\begin{gathered} A=4000(1+(0.05)/(2))^(2*10) \\ \\ =4000(1.025)^(20) \\ \\ =6554.47 \end{gathered}`

The balance after the end of 10 years is $6,554.47