Question

Mike invests $1,778 in a retirement

account with a fixed annual interest rate of
3% compounded 2 times
per year.
What
will the account balance be after 15 years?

Answer 1

A = $2,779.16

Explanation:

A = $2,779.16

A = P + I where

P (principal) = $1,778.00

I (interest) = $1,001.16

First, convert R as a percent to r as a decimal

r = R/100

r = 3/100

r = 0.03 rate per year,

Then solve the equation for A

A = P(1 + r/n)^nt

A = 1,778.00(1 + 0.03/2)^(2)(15)

A = 1,778.00(1 + 0.015)^(30)

A = $2,779.16

Summary:

The total amount accrued, principal plus interest, with compound interest on a principal of $1,778.00 at a rate of 3% per year compounded 2 times per year over 15 years is $2,779.16.