Question

Sam puts $500 in the bank and does not put any more money in or take any out for eight years. He receives 6% interest yearly, compounded semi-annually. How much money will be in the account after eight years?

Answer 1

Using the compound interest formula, Sam will have $800.515 in his bank account after eight years, with an initial investment of $500 at an annual interest rate of 6% compounded semi-annually.

Step-by-step explanation:

The amount of money Sam will have in his bank account after eight years can be calculated using the formula for compound interest. With a principal of $500, an annual interest rate of 6% compounded semi-annually, and a time span of 8 years, we can use the formula A = P(1 + r/n)(nt), where:

P is the principal amount ($500)

r is the annual interest rate (0.06)

n is the number of times the interest is compounded per year (2)

t is the time the money is invested or borrowed for, in years (8)

Plugging the values into the formula, we get:

A = 500(1 + 0.06/2)(2*8)

A = 500(1 + 0.03)16

A = 500(1.03)16

A = 500 * 1.60103

A = $800.515

So, after eight years, Sam will have $800.515 in his account.