Question

Use the compound interest formulas A=P(1+r/n)^nt and A=Pe^rt to solve.

Answer 1

Given: An investment of $20,000 for 5 years at an interest rate of 6.5%.

Required: To determine the amount if the money is compounded semi-annually.

Step-by-step explanation: The formula for compound interest is as follows-

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

Here,

`\begin{gathered} P=20000 \\ t=5 \\ n=2 \\ r=(6.5)/(100) \\ =0.065 \end{gathered}`

Substituting the values into the formula as follows-

`\begin{gathered} A=20000(1+(0.065)/(2))^(2*5) \\ \end{gathered}`

Further solving for amount gives-

`A=27,537.89`

Final Answer: The accumulated value is $27,537.89