Question

Assume ABC Company deposits $90,000 with First National Bank in an account earning interest at 6% per annum, compounded semi-annually. How much will ABC have in the account after five years if interest is reinvested?

Answer 1

Answer:

Step-by-step explanation:

I'm goig to assume that the formula we need here is the following:

$A(t)=P(1+\frac{r}{n})^{(n)(t)$

where A(t) is the amount in the account after the compounding is done, n is the number of times per year the compounding occurs, r is the rate in decimal form, and t is the time in years.  Filling in accordingly,

$A(t)=90000(1+\frac{.06}{2})^{(2)(5)}$ and simplifying a bit,

$A(t)=90000(1.03)^{10}$ and simplifying a bit more,

A(t) = 90000(1.343916379) so

the amount in the account after 5 years is

A(t) = 120,952.47