Use the compound interest formula to compute the total amount accumulated.
-$19,000 for 5 years at 7% compounded semiannually
A) $22,566.04
B) $26,801.38
C) $25,650.00
D) $26,648.48

Question

Quizplus · Accepted Answer

The compound interest formula is A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount ($19,000), r is the annual interest rate (7% or 0.07), n is the number of times that interest is compounded per year (semiannually means n=2), and t is the time the money is invested for in years (5 years). Plugging in the values: A = 19000(1 + 0.07/2)^(2*5) = 19000(1 + 0.035)^(10) = 19000(1.035)^10 ≈ $26,801.38.

Use the Compound Interest Formula to Compute the Total Amount