Question

If $6,000 is invested for six years and seven months at 6% compounded semi-annually, what is the interest that the investment earns?

Select one: a. $2,832.45 b. $2,854.72 c. $2,814.78 d. $2,833.96

Answer 1

Answer: Option (B) is correct.

Given:

P = $6000

r = 6%

t = 6 years and 7 months = 79 months

∵ It is compounded semi-annually

∴
`I = P*(1+(r/2)/(100))^{(t)/(6) } - P`

`I = 6000*(1+(6/2)/(100))^{(79)/(6) } - 6000`

I = 8854.72 - 6000

I = 2854.72