Question

f an investor puts $1500 dollars into an account at an annual rate of 4.8% interest compounded twice a month, how much will they have after two years?

Answer 1

Answer:

They will have $1651 after two years.

Step-by-step explanation:

The compound interest formula is given by:

$A(t) = P(1 + \frac{r}{n})^{nt}$

Where A(t) is the amount of money after t years, P is the principal(the initial sum of money), r is the interest rate(as a decimal value), n is the number of times that interest is compounded per unit year and t is the time in years for which the money is invested or borrowed.

$1500 dollars into an account at an annual rate of 4.8%

This means that $P = 1500, r = 0.048$

Interest compounded twice a month.

A year has 12 months.

So 12*2 = 24 compundings, which means that $n = 24$

How much will they have after two years?

This is A(2).

$A(t) = P(1 + \frac{r}{n})^{nt}$

$A(2) = 1500(1 + \frac{0.048}{24})^{24*2} = 1651$

They will have $1651 after two years.