A principal of $6000 is invested in an account paying an annual rate of 5%. Find the amount in the account after 4 years if the account is compounded semiannually, quarterly, and monthly. (a) The amount in the account after 4 years if the account is compounded semiannually is $ nothing. (Round to the nearest cent.)

Solution :

Given :

Principal amount deposited, P = $ 6000

Rate of interest, r = 5%

Number of years, t = 4 years

When the deposited amount is compounded semiannually, i.e. n = 2

Therefore,

Future value,

       = 6000 x 1.2184

        = 7310.4

Therefore, after 4 years there will be $ 7310.4 in the amount when compounded semi annually.

When the deposited amount is compounded quarterly, i.e. n = 4

Therefore,

Future value,

       = 6000 x 1.219889

        = 7319.334

Therefore, after 4 years there will be $ 7319.334 in the amount when compounded quarterly.

When the deposited amount is compounded monthly, i.e. n = 12

Therefore,

Future value,

       = 6000 x 1.22089

        = 7325.34

Therefore, after 4 years there will be $ 7325.34 in the amount when compounded monthly.

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step-by-step explanation: