Question

Bill Jensen deposits $8500 with Bank of America in an investment paying 5% compounded semiannually. Find the interest in 7 years

Answer 1

The principal is given as $8500 , rate is 5 percent compounded semi-annually and time is 7 years.

To determine the interest ,

Use the formula

$A=P+I$

First determine the amount,

$A=P(1+\frac{r}{n})^{nt}$$A=8500(1+\frac{5}{100\times2})^{2\times7}$$A=8500(1+0.025)^{14}=8500\times1.025^{14}$$A=12010.28\text{dollar}$

Then the interest is determined as

$12010.28=8500+I$$I=12010.28-8500$$I=3510.28dollar$

Hence the interest in 7 years is 3510.28 dollar.