Question

Ben invests $800 into an account with a 2.1% interest rate that is compounded semiannually. How much money will he have in this account if he keeps it for 10 years? Round your answer to the nearest dollar. Provide your answer below:

Answer 1

Answer:

$985.86

Step-by-step explanation:

Interest is the amount earned on an initial investment.

Compound Interest

The question asks us to find the amount of money in an account after 10 years of earning interest. Additionally, the question states that the interest is compounded semiannually. Compound interest is the amount earned on the initial investment and the interest already earned. Remember that semiannually means twice a year. Also, it's important to know that the initial investment is often referred to as principal.

Interest Formula

In order to calculate compound interest we can use the following formula:

• $A = P(1+\frac{r}{n} )^{nt}$

In this formula, P is the principal, r is the interest rate as a decimal, n is the number of times compounded per year, and t is the time in years. So, to solve this, all we need to do is plug in the information we already know.

• $A = 800(1+\frac{0.021}{2})^{2*10}$
• A = 985.86

This means that after 10 years, the balance will be $985.86.