Question

If $4527 is invested at 7.95% for 4 years, find the future value if the interest is compounded semi-annually. Round to thenearest cent.

Answer 1

If $4527 is invested at 7.95% for 4 years, find the future value if the interest is compounded semi-annually. Round to the

nearest cent.

Remember that

The compound interest formula is equal to

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

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

P=$4,527

r=7.95%=0.0795

t=4 years

n=2

substitute the given values

`A=4,527(1+(0.0795)/(2))^(2\cdot4)`
`A=\$6,183.61`

therefore

the answer is $6,183.61