Subjects finance mathematics

Compound Interest

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Compound Interest


1. **State the problem:** Layla deposited 15000 in an account that compounds semiannually at an annual interest rate of 6% for 2 years. We need to find the amount in the account after 2 years. 2. **Identify the variables and formula:** - Principal $P = 15000$ - Annual interest rate $r = 0.06$ - Number of times compounded per year $n = 2$ (semiannually) - Time in years $t = 2$ The formula for compound interest is: $$ A = P\left(1 + \frac{r}{n}\right)^{nt} $$ 3. **Calculate the exponent and base:** $$ nt = 2 \times 2 = 4 $$ $$ 1 + \frac{r}{n} = 1 + \frac{0.06}{2} = 1 + 0.03 = 1.03 $$ 4. **Calculate the amount $A$:** $$ A = 15000 \times (1.03)^4 $$ 5. **Evaluate $ (1.03)^4 $:** $$ (1.03)^4 = 1.12550881 $$ 6. **Multiply to find $A$:** $$ A = 15000 \times 1.12550881 = 16882.63 $$ 7. **Interpretation:** After 2 years with semiannual compounding at 6%, the account balance is approximately 16882.63. **Final answer:** $$ \boxed{16882.63} $$