Question

Ingesting $10,000 in a savings account at 5% annual interest compound semiannually will result in approximately how much after 10 years? Use the formula: A = P(1 + r/m) ^mtA. $16,288.95B. $15,000.00C. $13,448.89D. $16,386.16

Answer 1

Basically you need to use the formula:

A = P(1 + r/m)^(mt)

Where:

P = Principal = 10000

r = interest rate = 5% = 0.05

m = Number of times interest is compounded per unit t = 2

t = time = 10

So:

A = 10000(1 + 0.05/2)^(2*10) = 10000(1.025)²⁰ = $16386.16