James deposited $10,000 into an account that earns 5.5% compound interest, compounded semiannually. How much interest will James earn after 10 years?

1 Answer
Jul 7, 2018

Answer:

Interest: #$7204.28#

Explanation:

Given: deposits #$10000# with 5.5% compound interest, compounded semiannually. Find the amount of interest earned.

Compound Interest formula:

#A = P(1 + r/n)^(nt)#,

Where #r = %/100#, #n =# number of compoundings per year;

#t = #number of years, #P = #amount deposited and #A# = balance after the time period.

#A = 10000(1 + 0.055/2)^(2*10) = $17204.28#

Interest earned #= A - P = $17204.28 - $10000 = $7204.28#