Question

If $6,000 is invested for six years and seven months at 6% compounded semi-annually, what is the interest that the investment earns?

Select one: a. $2,832.45 b. $2,854.72 c. $2,814.78 d. $2,833.96

Answer 1

Answer: Option (B) is correct.

Given:

P = $6000

r = 6%

t = 6 years and 7 months = 79 months

∵ It is compounded semi-annually

∴ $I = P\times(1+\frac{r/2}{100})^{\frac{t}{6} } - P$

$I = 6000\times(1+\frac{6/2}{100})^{\frac{79}{6} } - 6000$

I = 8854.72 - 6000

I = 2854.72