If 15000 is invested at an interest rate of 4 per year compo

If $15,000 is invested at an interest rate of 4% per year, compounded semiannually, find the value of the investment after the given number of years. (Rounded to nearest cent.) a) 4 years b) 8 years c) 12 years

Solution

Solution:

As we know;

Compound interest :

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

Here,

P=initial investment($15000),

r=interest rate(4% = 0.04),

n=number of compounding periods per year(n= 2 as its compounded semiannually),

A=amt after t-years

Hence;

A(4) = 15000(1+.04/2)^2*4 = $ 17574.89072

A(8) = 15000(1+.04/2)^2*8 = $ 20591.78558

A(12) = 15000(1+.04/2)^2*12 = $ 24126.55874