Answer:
a) Amount saved if the interest is compounded annually is $5832
b) Amount saved if the interest is compounded semi-annually is $5849.5
Step-by-step explanation:
Principal Amount P = 5000
Time t = 10 years
Annual interest i = 8% = 0.08
We need to find amount saved if interest is compounded a) annually b) semi-annually
a) Amount saved if the interest is compounded annually
If interest compounded annually, n= 1
Using Formula:
Putting values:
So, Amount saved if the interest is compounded annually is $5832
b) Amount saved if the interest is compounded semi-annually
If interest compounded semi-annually, n= 2
Using Formula:
Putting values:
So, Amount saved if the interest is compounded semi-annually is $5849.5