Today is your 21^st birthday and your bank account balance is $25,000.Your account is earning 6.5% interest compounded semiannually.How much will be in the account on your 50^th birthday?

Question

Quizplus · Accepted Answer

The correct answer is A because the formula for compound interest is A = P(1 + r/n)^(nt), where A is the future value, P is the principal, r is the annual interest rate, n is the number of times per year that the interest is compounded, and t is the number of years. In this case, P = $25,000, r = 6.5%, n = 2 (since the interest is compounded semiannually), and t = 50 - 21 = 29. Plugging these values into the formula, we get A = $25,000(1 + 0.065/2)^(2*29) = $159,795.

Today Is Your 21st Birthday and Your Bank Account Balance

Today Is Your 21^st Birthday and Your Bank Account Balance