Question

If John invests $600 in a savings account earning interest at a rate of 6% compounded semiannually how much will be in account after 8 years

Answer 1

$962.82 will be in John's account after 8 years if compounded semiannually.

Explanation:

The formula used to find the amount after 8 years is:

A = P(1+ r/n)^nt

Where A = future value

P= principal value

r = interest rate ( in decimals)

n = no of times interest is compounded

t = time

Putting the values:

P = $600

r = 6% = 0.06

n = 2

t = 8

A= 600 *(1+0.06/2) ^2(8)

A= 600 *(1.03) ^16

A =600*1.605

A = 962.82

So, $962.82 will be in John's account after 8 years if compounded semiannually.