Question

Lee Holmes deposited $15,000 in a new savings account at 9% interest compounded semiannually. At the beginning of year 4, Lee deposits an additional $40,000 at 9% interest compounded semiannually. At the end of 6 years, what is the balance in Lee’s account?

Answer 1

Total sum at te end of 6 years=$ 73,138.97

Step-by-step explanation:

The total sum in Lee's account at the end of year would be determined as follows:

FV= A × (1+r)^n

FV- Future sum?,

A- deposit amount ,

r- interest rate - 9%/2 = 4.5% per 6 months

n- number of years is 6

First deposit for 6 years

FV = 15,000× 1.045^(2×6)

= $25,438.22

Last 40,000 for 2 years

FV = 40,000 1.045^(2×2)

=47,700.74403

Total sum at the end of 6 years

= $25,438.22 + $47,700.74

=$ 73,138.97