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Amanda deposits $1500 into an account that pays 4.8% interest compounded semi-annually. What is the account balance after 3 years?



Answer :

Answer:

[tex]1729.38[/tex]

Step-by-step explanation:

Compound Interest Formula

A formula can be used when calculating the balance an account gains from compounding the initial deposit for n times a year--for t years--with an interest rate of r,

                                               [tex]A=P\left(1+\dfrac{r}{n}\right)^{nt}[/tex],

where r is in decimal form.

[tex]\dotfill[/tex]

Solving the Problem

From the problem we know

  • P = 1500
  • r = 0.048,
  • t = 3,
  • n = 2 ("semi-" means two),

all we have to do is plug it in and compute!

                                   [tex]A=1500\left(1+\dfrac{0.048}{2}\right)^{(2)(3)}[/tex]

                                [tex]A=1500\left(1.024\right)^{6}=1729.38[/tex]

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