Question

You invest $8,000 in a savings account paying 5 perc ent interest a year, compounded annually. At the end of four years, your account will contain approximately (A) $9,624 $10,880 $10,208 © $10,208 (D $9,728

Answer 1

Answer is D $ 9,728 this amount close to calculation,

Principal Amount	$ 8,000.00
Annual interest rate	5%
Compounding period per year	2
Years	4
Investment value	$ 9,747.22
Formula FV = P(1+r)n PV is present value , r is interet rate ,n = number of compounding
Alternative calculation
Installments(semi- annually)		Calculation
1	$ 8,200.00	8000*1.025
2	$ 8,405.00	8200*1.025
3	$ 8,615.13	8405*1.025
4	$ 8,830.50	8615.13*1.025
5	$ 9,051.27	8830.5*1.025
6	$ 9,277.55	9051.27*1.025
7	$ 9,509.49	9277.55*1.025
8	$ 9,747.22	9509.49*1.025
Compounded semi -annually means interest accumulated to main balance at the end of each 6 month period
Interest rate per year	5%
Interest rate for 6 moths(half years)	2.5%