Question

If you invest $5,000 at 1.8 percent for 5 years, compounded semi-annually, what is the amount in the account at the end of 5 years?

$5,450


$5,469


$5,470


$5,560

Answer 1

Answer: B: $5,469

Explanation:

Here is the formula for compound interest:

CI = P(1 + r/n)^rt, where n is the number of times the interest is compounded in a year. In our case, since there is semi annual compounding, n = 2.

The rest of the formula can be filled out:

CI = 5000(1 + 0.018/2)^(5x2)

CI = 5000(1.009)^10

CI = 5000(

.: CI ≅ $5468.67

Thus the answer is B.