Question

Select the correct answer. Liam deposited $15,000 into an investment account with an annual interest rate of 2.15% compounded semiannually. Using this formula, about how much money will be in his account after 6 years?

$19,362.07
$18,675.50
$15,993.88
$17,053.61

Answer 1

A = $17,053.61

Explanation:

The formula for calculating compound interest is

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

Where,

A = interest + principal

P = principal = $15,000

r = interest rate = 2.15% =0.0215

n = number of periods = 2

t = time = 6 years

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

= 15,000(1 + 0.0215/2)^2*6

= 15,000(1 + 0.01075)^12

= 15,000(1.01075)^12

= 15,000(1.1369071560258)

= 17,053.607340387

Approximately,

A = $17,053.61