Jessica received a gift of $7,500 at the time of her high school graduation. She invests it in an account that yields 10% compounded semiannually. What will the value of Jessica's investment be at the end of 5 years? (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)

Question

Quizplus · Accepted Answer

We can use the formula for compound interest:

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

Where A is the final amount, P is the principal (initial amount invested), r is the annual interest rate (as a decimal), n is the number of times the interest is compounded per year, and t is the number of years.

In this case, P = $7,500, r = 0.10 (10%), n = 2 (semiannual compounding), and t = 5.

A = $7,500(1 + 0.10/2)^(2*5)
A = $7,500(1 + 0.05)^10
A = $7,500(1.62889)
A = $12,216.75

Therefore, the value of Jessica's investment will be $12,216.75 at the end of 5 years. Answer choice E is the correct option.

Jessica Received a Gift of $7,500 at the Time of Her