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Popular Word Problems >

Eugene’s parents put 2,500 in a bank account for college tuition at an interest rate of 8.75% compounded semiannually. What will be the balance after 18 years?

Solution

E ug e n e ’ s p a re n t s p u t 2, 500 in a bank a cco u n t f or co ll e g e t u i t i o n a t an in t eres t r a t e o f 8.75% co m p o u n d e d se miann u a ll y . Wha t w i ll b e t h e ba l an ce a f t er 18 ye a rs ?

Solution

Amount : 11679.21

Solution steps

Translate the problem into an equation:

A = 2500 (1 + \frac{0.0875}{2})^{2 \cdot 18}

2500 (1 + \frac{0.0875}{2})^{2 \cdot 18} = 11679.21341 \dots

Round to the nearest hundredth:

11679.21

Amount : 11679.21

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