Question

Jasmine invests $1,661 in a retirement

account with a fixed annual interest rate of
2% compounded 2 times per year. What
will the account balance be after 14 years?

Answer 1

2235.71 ($)

Explanation:

A (1 + increase) ^n = N

Where N is future amount, A is initial amount, increase is percentage increase/decrease, n is number of mins/hours/days/months/years.

compounded twice a year. split the 2% into 2, so we have 1% for each half a year.

1661 X 1% (0.01) = 16.61.

1661 + 16.61 = 1677.61

for 2nd half of year: 1677.61 X 0.01 = 16.7761.

1677.61 + 16.7761 = 1694.39.

so A = 1694.39, increase = 2% (0.02), n = 14.

1694.39 (1 + 0.02)^14

= 1694.39 (1.02)^14

= 2235.71 ($).