Question

Suppose 5,500 dollars is placed in a saving account how much money would be in the saving account after 5 years if the compound interest semiannually at a rate of 5% per year

Answer 1

FV= $7,040.46

Explanation:

Giving the following information:

Initial investment (PV)= $5,500

Number of periods (n)= 5*2= 10 semesters

Interest rate (i)= 0.05/2= 0.025

To calculate the future value (FV), we need to use the following formula:

FV= PV*(1+i)^n

FV= 5,500*(1.025^10)

FV= $7,040.46