Given:
Principal = $5,000
Rate of interest = 3.2% annual interest compounded semiannually.
Time = 10 years.
To find:
The amount after compound interest.
Solution:
The formula for amount is:
[tex]A=P\left(1+\dfrac{r}{100n}\right)^{nt}[/tex]
Where, P is principal, r is rate of interest, n is number of times interest compounded and t is the number of years.
Putting P=5000, r=3.2, t=10, n=2, we get
[tex]A=5000\left(1+\dfrac{3.2}{100(2)}\right)^{2(10)}[/tex]
[tex]A=5000\left(1+0.016\right)^{20}[/tex]
[tex]A=5000\left(1.016\right)^{20}[/tex]
[tex]A=5000(1.37364389)[/tex]
On further simplification, we get
[tex]A=6868.21945[/tex]
[tex]A\approx 6868.22[/tex]
Therefore, the amount after compound interest is $6868.22.
