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Popular Word Problems >

Suppose that 18,000is deposited for five years at 5% APR. Calculate the interest earned if interest is compounded semiannually. Round your answer to the nearest cent.

Solution

S u pp ose t ha t 18, 000 i s d e p os i t e d f or f i v e ye a rs a t 5% A PR . C a l c u l a t e t h e in t eres t e a r n e d i f in t eres t i s co m p o u n d e d se miann u a ll y . R o u n d yo u r an s w er t o t h e n e a res t ce n t .

Solution

Interest : 5041.52

Solution steps

Translate the problem into an equation:

23041.52179 \dots = 18000 + I

Solve for

I, 23041.52179 \dots = 18000 + I : I = 5041.52

Interest : 5041.52

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