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Tim has been saving for a down payment on a car. He invested 4,000 in an account earning 2.5% interest compounded semi-annually. After 7 years, he is ready to buy his new car. How much does he have in his account for a down payment?

Solution

Tim has been saving for a down payment on a car. He invested 4, 000 in an account earning 2.5% interest compounded semi-annually. After 7 years, he is ready to buy his new car. How much does he have in his account for a down payment?

Solution

Amount : 4759.82

Solution steps

Translate the problem into an equation:

A = 4000 (1 + \frac{0.025}{2})^{2 \cdot 7}

4000 (1 + \frac{0.025}{2})^{2 \cdot 7} = 4759.81899 \dots

Round to the nearest hundredth:

4759.82

Amount : 4759.82

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