Question

An initial investment of $500 is made in an account which earns 6% interest compounded

semiannually. Which of these equations gives the value of the investment after t years?​

Answer 1

A = 500(1+6%/2)^2t

Explanation:

Given the general compound interest formula A = P(1+r/n)^nt. With an initial investment of $500, and percent interest of 6% compounded semi annually(every six months/half a year/twice in one year). A = 500(1+6%/2)^2t .

i.e if given two years of compound interest, t=2. A = 500(1+6%/2)^2(2), 500(1+0.03)^4, 500(1.03)^4, 500(1.12550881), 500(≈1.1255) = 562.75

A = 562.75$ for two years