Regina deposits $3500 in a savings account that pays 1.05% interest, compounded semi-annually.

b) What is the balance at the end of the first 6 months?

c) How much interest does the account earn in the second six months?

d) What is the balance at the end of the year?

e) How much interest does the account earn the first year?

f) How much interest would $3500 earn in one year at 1.05% interest, compounded annually?

g) How much more interest does Regina earn at an interest rate of 1.05% compounded semi-annually than compounded annually?

Question

Humberto Hansen

Mathematics

17 May, 00:02

Regina deposits $3500 in a savings account that pays 1.05% interest, compounded semi-annually.

b) What is the balance at the end of the first 6 months?

c) How much interest does the account earn in the second six months?

d) What is the balance at the end of the year?

e) How much interest does the account earn the first year?

f) How much interest would $3500 earn in one year at 1.05% interest, compounded annually?

g) How much more interest does Regina earn at an interest rate of 1.05% compounded semi-annually than compounded annually?

+3

Answers (1)

Know the Answer?

Nora Sanders · Answer 1

Using the compound formula A = P (1+r/n) ^tn

We get:

b)

A = 3500 (1 + 0.0105/2) ^2*0.5

A = 3500 x 1.00525^1

A = 3518.38

Interest = 3518.38 - 3500 = $18.38 for the first 6 months.

c) 3518.38 x 1.00525^1

Interest = $18.47 in the second 6 months.

d) 3518.38 + 18.47 = $3,536.85 at the end of the first year.

e) 3536.85 - 3500 = $36.85 interest in first year.

f) 3500 x 1.0105 = 3536.75

3536.75 - 3500 = $36.75 interest in one year.

g) 36.85 - 36.75 = $0.10 more.