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17 July, 18:20

Karla invests $300 compounded every 6 months at a rate of 10% for 3 years. At the end of three years, Karla will have $402.03 in her account. Show how to arrive at this amount.

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  1. 17 July, 18:27
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    Step-by-step explanation:

    We would apply the formula for determining compound interest which is expressed as

    A = P (1 + r/n) ^nt

    Where

    A = total amount in the account at the end of t years

    r represents the interest rate.

    n represents the periodic interval at which it was compounded.

    P represents the principal or initial amount deposited

    From the information given,

    P = $300

    r = 10% = 10/100 = 0.1

    n = 2 because it was compounded 2 times in a year (6 months).

    t = 3 years

    Therefore,

    A = 300 (1 + 0.1/2) ^2 * 3

    A = 300 (1 + 0.05) ^6

    A = 300 (1.05) ^6

    A = $402.03
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