Suppose Tabitha finds an annuity that pays 7.0% annual interest, compounded semiannually. She decides to invest 650 semiannually in this annuity for 5 years. How much interest does she earn during the 5 years?

Solution

Solution

Interest : 266.89

Solution steps

Translate the problem into an equation:

916.88919 \dots = 650 + I

Solve for

I, 916.88919 \dots = 650 + I : I = 266.89

Interest : 266.89

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