Question

A man deposits $ 14,850 into a bank, which pays 4% interest that is compounded

Answer 1

Given:

Principal = $14850

Rate of interest = 4% compounded semiannually.

Time = 3 years

To find:

The amount after 3 years.

Solution:

Formula for amount is:

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

Where, P is principal, r is the rate of interest in decimal, n is the number of times interest compounded and t is the number of years.

The interest is compounded semiannually, so n=2.

Putting $P=14850, r=4, n=2, t=3$ in the above formula, we get

$A=14850\left(1+\dfrac{0.04}{2}\right)^{2(3)}$

$A=14850\left(1+0.02\right)^{6}$

$A=14850\left(1.02\right)^{6}$

On further simplification, we get

$A=14850(1.12616242)$

$A=16723.511937$

$A\approx 16723.51$

Therefore, the amount in the account after three years is $16723.51.