Angie invested $50,000 she received from her grandmother today in a fund that is expected to earn 10% per annum.To what amount should the investment grow in five years if interest is compounded semi-annually?

Question

Quizplus · Accepted Answer

Using the formula for compound interest, we have:

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

where:
A = amount
P = principal (initial investment)
r = annual interest rate (as a decimal)
n = number of times the interest is compounded per year
t = number of years

Plugging in the values given, we have:

A = 50,000(1 + 0.1/2)^(2*5)
A = 81,445.05

Therefore, the investment should grow to $81,445.05 in five years if interest is compounded semi-annually. The correct answer is choice C.

Angie Invested $50,000 She Received from Her Grandmother Today in a Fund