Question

Twelve years ago, claire put $1,800 in an account that pays an interest rate of 2.5% compounded semiannually. how much total money will be in this new account after 7 years?

A. 2453.83
B. 2139.63
C. 339.63
D. 439.63

Answer 1

$2142

Explanation:

Using compound interest formula then

`A=P(1+\frac {r}{n})^(nt)`

Here

A = the future value

P = the principal investment

r = the annual interest rate (decimal)

n = the number of times that interest is compounded per unit t

t = the time the money is invested or borrowed for

Substituting the given figures then

`A=1800(1+\frac {0.025}{2})^(2* 7)=2141.91854740705\approx 2142`