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You deposit $3000 into a bank account that pays 1.25% annual interest, compounded semi-annually. What is the final balance after 4 years

2 Answers

5 votes

Final answer:

The final balance after 4 years is approximately $3143.70.

Step-by-step explanation:

To calculate the final balance after 4 years, we can use the formula for compound interest:

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

Where:

  • A is the final balance
  • P is the initial deposit ($3000)
  • r is the annual interest rate (1.25% or 0.0125)
  • n is the number of times interest is compounded per year (2 for semi-annually)
  • t is the number of years (4)

Substituting the values into the formula, we have:

A = 3000(1 + 0.0125/2)⁽²ˣ⁴⁾

A = 3000*1.0125⁸

A= $3143.70

Simplifying this expression, the final balance is approximately $3143.70.

User Kdubs
by
9.4k points
7 votes

Answer:

$3,153.32

Step-by-step explanation:

Given that

The deposited amount is $3,000

The annual interest rate is 1.25%

So, the semi-annual interest rate is 1.25% ÷2 = 0.625%

And, the time period = 4 × 2 = 8

We need to find out the final balance

So,

As we know that

Future value = Present value × (1 + rate of interest)^number of years

= $3,000 × (1 + 0.625%)^8

= $3,153.32

User Samuel Negru
by
8.8k points

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