Suppose that $2000 is invested at a rate of 5.5%, compounded semiannually. Assuming that no withdrawals are made, find the total amount after 3 years.

Question

Homework question that I can't seem to get correct....

Suppose that $2000 is invested at a rate of 5.5%, compounded semiannually. Assuming that no withdrawals are made, find the total amount after 3 years.

Do not round any intermediate computations, and round your answer to the nearest cent.

Answer 1

Compound Interest: A = P (1 + r/n)^nt, = amount given principal (P) at rate (r) compounded n times per year over time (t years).

Here P = 2000, r = 0.055, n = 2 and t = 3, so

A = 2000(1+0.055/2)^2*3 = $2353.54