Kristen invests $5,000 in a bank. The bank pays 6.45% interest compounded semi-annually. How much money will she have after 2 ye

Question

3 years ago

13

ars, if she makes no additional contributions or withdrawals to the account?

1 answer:

kupik [55] · Answer 1 · 2022-08-20T07:22:47+03:00

Answer: $5,676.87

Step-by-step explanation:

Hi, to answer this question we have to apply the compounded interest formula:

A = P (1 + r/n) nt

Where:

A = Future value of investment (principal + interest)

P = Principal Amount

r = Nominal Interest Rate (decimal form, 6.45/100= 0.0645)

n= number of compounding periods in each year (2)

Replacing with the values given

A = 5,000 (1+ 0.0645/2)^ (2x2)

A = 5,000 (1.03225)^4

A = $5,676.87