Question

Marshall invest $4500 into an account bearing 6% interest compounded semiannually. How much interest will be added into this account after five years? Round to the nearest cent

Answer 1

Answer:

$1547.62

Step-by-step explanation:

The principal Marshall invested is $4500.

The rate of interest is 6%

The compound interest formula is

$A=P(1+r)^n$

We substitute P=4500,r=0.06 and t=5 to obtain:

$A=4500(1+ \frac{0.06}{2} )^ {2 \times 5}$

We simplify to get:

$A=4500(1+ 0.03)^ {10} = 4500 \times {1.03}^{10}$

This gives us:

$A=6047.62$

The interest after 5 years is

$6047.62 - 4500 = 1547.62$