Question 587926
a. What is the future value of $12,000 invested today in 9 years time if
interest was earned at 4.9% compounded semiannually?
b. What is the total dollar amount of interest earned by this investment?
**
Compound Interest Formula: A=P(1+r)^n, P=initial investment, r=interest rate per period, n=number of periods, A=amount after n periods.
For given problem:
P=12000
r=.049/2=0.0245
n=2*9=18 
..
A=12000(1+.0245)^18
A=12000(1.0245)^18=18552.25
Interest=18552.25-12000=6552.25
..
future value of $12,000=$18552.25
amount of interest earned =$6552.25