Question

A principal of $7000 is invested in an account paying an annual rate of 4%. Find the amount in the account after 4 years if the account is compounded semiannually.

quarterly, and monthly
(a) The amount in the account after 4 years if the account is compounded semiannually is $0.
(Round to the nearest cent.)

Answer 1

Answer:A=P{1+r/n}^nt. A is the end value, P the start. r is the rate, divided by n, the number of compoundings per year. t is the number of years.

semiannual is 2 compoundings

A=7000{1+(0.055/2)}^6, the 6 from 2 compoundings a year for 3 years. Do the parentheses first, so that you have 1.0.0257^6. When you get that, multiply by $7000. Round at the end, not intermediate steps.

A=$8237.38

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A=7000{1+(.055/4)}^12=$8246.48. Notice that what is in the parentheses gets smaller, but it gets raised to a higher power.

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A=7000{1+(0.055/12)}^36=$8252.64