Solve the problem.
-John Leeʹs savings account has a balance of $3662. After 3 years, what will the amount of interest Be at 2% compounded semiannually?
A) $225.29
B) $224.14
C) $219.72
D) $110.96

Question

Quizplus · Accepted Answer

The amount of interest can be calculated using the formula for compound interest: A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount (the initial amount of money), r is the annual interest rate (decimal), n is the number of times that interest is compounded per year, and t is the time the money is invested for in years. In this case, P = $3662, r = 2% or 0.02, n = 2 (since the interest is compounded semiannually), and t = 3 years. Plugging these values into the formula gives A = 3662(1 + 0.02/2)^(2*3) = 3662(1 + 0.01)^6 ≈ 3662 * 1.061677812 = $3887.29. The amount of interest earned is then $3887.29 - $3662 = $225.29.

Solve the Problem. -John Leeʹs Savings Account Has a Balance of $3662. After