Question

Nora's savings account has a balance of $3979. After 4 years, what will the amount of interest be at 12% compounded semiannually? a. $2367.92 c. $2362.92 b. $4774.80 d. $2353.92

Answer 1

The correct answer is C.$2362.92

Answer 2

Option C
`I=\$2,362.92`

Explanation:

we know that

The compound interest formula is equal to

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

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

`t=4\ years\\ P=\$3,979\\ r=0.12\\n=2`

substitute in the formula above

`A=\$3,979(1+(0.12)/(2))^(2*4)`

`A=\$6,341.92`

Find the amount of interest

`I=\$6,341.92-\$3,979=\$2,362.92`