The interest on $6,000 at 6% compounded semiannually for eight years is (use table in the handbook):
A)$3,628.20
B)$3,682.02
C)$362.82
D)$13,628.20
E)None of these

Question

Quizplus · Accepted Answer

The 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 ($6,000), r is the annual interest rate (6%, or 0.06), n is the number of times that interest is compounded per year (2 for semiannually), and t is the time the money is invested for in years (8 years). The interest earned is then A - P. Plugging in the values: A = 6000(1 + 0.06/2)^(2*8) = 6000(1 + 0.03)^(16) ≈ 9628.20. The interest earned is 9628.20 - 6000 = $3,628.20.

The Interest on $6,000 at 6% Compounded Semiannually for Eight