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

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

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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