Interest on $2,630 at 3% compounded semiannually for five years is:
A) $304.90
B) $414.49
C) $569.92
D) $418.96
E) None of these

Question

Quizplus · Accepted Answer

The formula for compound interest is A = P(1 + r/n)^(nt), where P is the principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the time in years. For this problem: P = $2,630, r = 0.03, n = 2, t = 5. The calculation gives A = $3,048.96, so the interest is $3,048.96 - $2,630 = $418.96.

Interest on $2,630 at 3% Compounded Semiannually for Five Years