Question

Suppose that 2000 is invented at a rate of 3.5%, compounded semiannually. Assuming that no withdrawals are made, find the total amount after 4 years. Do not round any interminate computations, And round your answer to the nearest cent.

Answer 1

Answer:

$2,297.76

Step-by-step explanation:

Present value: P = 2000

Future value: F

Annual interest rate: r = 3.5% = 0.035

Time: t = 4 years

Number of compounding periods per year: n = 2

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

$F = 2000(1 + \dfrac{0.035}{2})^{2 \times 4}$

$F = 2000(1 + 0.0175)^{8}$

$F = 2000(1.0175)^{8}$

$F = 2000(1.148881783)$

$F = 2297.76$

Answer: $2,297.76