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What if Jennifer were to invest​ $2,750 today, compounded​ semiannually, with an annual interest rate of​ 5.25%. What amount of interest will Jennifer earn in one​ year?

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facundobuzzetti

Answer:

Interest earned= $146.27

Explanation:

Giving the following information:

Initial investment= $2,750

Interest rate= 5.25% compounded semianually.

First, we need to calculate the final value for the first year.

FV= PV*(1+i)^n

n=2

i= 0.0525/2= 0.02625

PV= 2,750

FV= 2,750*(1.02625)^2

FV=  $2,896.27

Interest earned= 2,896.27 - 2,750= $146.27

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