Respuesta :
Answer:
The future value of $1,720 in 14 years assuming an interest rate of 7.25 percent compounded semiannually is $4,661.61
Step-by-step explanation:
The compound interest formula is given by:
[tex]A = P(1 + \frac{r}{n})^{nt}[/tex]
Where A is the amount of money, P is the principal(the initial sum of money), r is the interest rate(as a decimal value), n is the number of times that interest is compounded per unit t and t is the time the money is invested or borrowed for.
In this problem, we have that
Semianually is twice a year, so [tex]n = 2[/tex].
Also, [tex]P = 1720, t = 14, r = 0.0725[/tex]
So
[tex]A = P(1 + \frac{r}{n})^{nt}[/tex]
[tex]A = 1720*(1 + \frac{0.0725}{2})^{2*14}[/tex]
[tex]A = 4661.61[/tex]
The future value of $1,720 in 14 years assuming an interest rate of 7.25 percent compounded semiannually is $4,661.61
