Question

Lyn invested $7,000 into a investment paying 3% interest, compounded semi-annually, twice a year. After five years, how much would the investment be worth? A=P(1+r/n)^nt
A.) $8,050.00
B.) $8,123.79
C.) $1,123.79
D.) $8,114.92
E.) $1,050.00

Answer 1

Answer:

Option B.) $8,123.79

Step-by-step explanation:

we know that    

The compound interest formula is equal to  

$A=P(1+\frac{r}{n})^{nt}$  

where  

A is the Final Investment Value  

P is the Principal amount of money to be invested  

r is the rate of interest  in decimal

t is Number of Time Periods  

n is the number of times interest is compounded per year

in this problem we have  

$t=5\ years\\ P=\ 7,000\\ r=0.03\\n=2$  

substitute in the formula above  

$A=\ 7,000(1+\frac{0.03}{2})^{2*5}$  

$A=\ 7,000(1.015)^{10}=\ 8,123.79$