Question

bridget recieved 1400 from her grandfather as a birthday gift she decided to put the money in an account to save for college the account has a fixed rate of 5.4% compound semi annually how much money will be in the account after five years

Answer 1

The amount received after 5 years is 1827.39

Explanation:

The amount received by Bridget from his grandfather as the birthday gift = 1400 .

Since he wants to deposit it and save for college, he earns interest rate = 5.4%

He deposited this money for the years = 5 years.

Here, the Present value (PV) is = 1400

Interest rate ( r ) = 5.4% or 0.054

Since the interest rate is compounded semi annually, So, n = 10

Now if we calculate the future value of 1400 with interest rate 5.4 percent:

`\text{The amount received after 5 years} = PV(1 + (r)/(2) )^(n) \\`

`= 1400(1 + (0.054)/(2))^(10) \\`

`= 1827.39`

Therefore, 1827.39 will be the total money in his account after five years.