SOLUTION: $2,000 is deposited in a savings account at 4% interest compounded semi-annually. Find the balance after 7 years and the amount of interest earned during that time

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Question 1139548: $2,000 is deposited in a savings account at 4% interest compounded semi-annually. Find the balance after 7 years and the amount of interest earned during that time
Found 2 solutions by greenestamps, josmiceli:
Answer by greenestamps(13198) About Me  (Show Source):
You can put this solution on YOUR website!


4% annual interest compounded semi-annually means 2% interest every 6 months.

7 years compounded semi-annually means 14 compounding periods.

The balance after 7 years is

2000%281%2B.02%29%5E14

Use a calculator.

Then of course the interest earned is the final balance, minus the original $2000.

Answer by josmiceli(19441) About Me  (Show Source):
You can put this solution on YOUR website!
+A+=+A%5B0%5D%2A%28+1+%2B+r%2Fn+%29%5E%28n%2At%29+
+A+=+2000%2A%28+1+%2B+.04%2F2+%29%5E%282%2A7%29+
+A+=+2000%2A1.02%5E14+
+A+=+2000%2A1.319478+
+A+=+2638.96+
+I+=+2638.96+-+2000+=+638.96+
the balance is $2,638.96
The interest is $638.96