Answer:
$1348.07
Step-by-step explanation:
Hello!
Compound Interest Formula: [tex]A = P(1 + \frac rn)^{nt}[/tex]
- A = Account Balance
- P = Principle/Initial Amount
- r = Rate of Interest (decimal)
- n = Number of times compounded (per year)
- t = Number of Years
Given Information
- Account Balance = ?
- Principle Amount = $1000
- Rate of Interest = 0.02
Why is the Rate 0.02?
This is because we are gaining money, so the multiplier should be greater than 1. We already added 1, which is 100% so you simply add the 0.02 for the extra 2%.
- Number of times compounded per year = 6
This is because it is being compounded bi-monthly, or once every 2 months. 12 months divided by 2 months is 6 months, so 6 times a year.
Solve
Solve by plugging in the given values into the formula.
- [tex]A = P(1 + \frac rn)^{nt}[/tex]
- [tex]A = 1000(1 + \frac {0.02}{6})^{6*15}[/tex]
- [tex]A = 1000(1 + 0.00333...)^{90}[/tex]
- [tex]A = 1000(1.00333...)^{90}[/tex]
- [tex]A = 1000(1.145743)[/tex]
- [tex]A \approx 1457.43[/tex]
This is really close to the first option, and since there is rounding involved with the repeating decimal, the first option should be correct.
The answer is $1348.07.
