Question

Suppose that $2000 is invested at a rate of 2.6% , compounded semiannually. Assuming that no withdrawals are made, find the total amount after 10 years.

Answer 1

Answer:

$2,589.52

Step-by-step explanation:

$A = P(1 + \dfrac{r}{n})^{nt}$

We start with the compound interest formula above, where

A = future value

P = principal amount invested

r = annual rate of interest written as a decimal

n = number of times interest is compound per year

t = number of years

For this problem, we have

P = 2000

r = 0.026

n = 2

t = 10,

and we find A.

$A = 2000(1 + \dfrac{0.026}{2})^{2 \times 10}$

$A = 2589.52$

Answer 2

Compound interest formula:

Total = principal x ( 1 + interest rate/compound) ^ (compounds x years)

Total = 2000 x 1+ 0.026/2^20

Total = $2,589.52