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Suppose Tabitha finds an annuity that pays 7.0% annual interest, compounded semiannually. She decides to invest $650
semiannually in this annuity for 5 years. How much interest does she earn during the 5 years?
Round your answer to the nearest cent.
Do NOT round until you have calculated the final answer.

Sagot :

Francocanacariidn

Answer:

Rounded to the nearest cent, over 5 years she will earn $ 916.89.

Step-by-step explanation:

Since Tabitha found an annuity that pays 7.0% annual interest, compounded semiannually, and she decided to invest $ 650 semiannually in this annuity for 5 years, to determine how much interest she will earn during the 5 years the following calculation must be performed:

650 x (1 + 0.07 / 2) ^ 5x2 = X

650 x (1 + 0.035) ^ 10 = X

650 x 1,035 ^ 10 = X

916,889 = X

Thus, rounded to the nearest cent, over 5 years she will earn $ 916.89.

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