Question

Tim has been saving for a down payment on a car. He invested $4,000 in an account earning 2.5% interest compounded semi-annually. After 7 years, he is ready to buy his new car. How much does he have in his account for a down payment? Round your answer to the nearest cent. Do NOT round until you have calculated the final answer.

Answer 1

Answer:

$4754.4

Step-by-step explanation:

The expression for compound interest is given as

A=P(1+r)^t

given data

P=$4,000

r=2.5%= 0.025

t=7years

The final amount can be solved as

A=4000(1+0.025)^7

A=4000(1.025)^7

A=4000*1.1886

A=4754.4

The amount on the account is $4754.4