Question

To start a new business Beth deposits $2000 at the end of each six-month period in an account that pays 8%, compounded semiannually. How much will she have at the end of 9 years?

Answer 1

Answer

At the end of 9 years, Beth will have approximately $4,051.63

Step-by-step explanation:

Given the following data

Principal = $2000

rate = 8%; 0.08

year = 9

Compounded semiannually

i.e n = 2

We will be using the compound interest formula

$\begin{gathered} A\text{ = P(1 + }\frac{r}{n})^{n\cdot\text{ t}} \\ A\text{ = 2000 (1 + }\frac{0.08}{2})^{2\cdot\text{ 9}} \\ A=2000(1+0.04)^{18} \\ A=2000(1.04)^{18} \\ A\text{ = 2000 }\cdot\text{ 2.02581} \\ A\text{ = \ 4,051.63} \end{gathered}$

At the end of 9 years, Beth will have approximately $4,051.63