Investing $12,000 in a savings account at 2% annual interest compounded semiannually will result in approximately how much money after 5 years?
Use the formula: A = P(1 + 1/m)^mt
a. $13,248.97
b. $13,255.47
c. $12,865.62
d. $13,200.00
Using the formula A = P(1 + 1/m)^mt, where P is the principal amount ($12,000), r is the annual interest rate (2%), m is the number of times the interest is compounded per year (2 semiannually), and t is the number of years (5), we can calculate:
A = 12000(1 + 1/2)^(2*5)
A = 12000(1 + 0.5)^10
A = 12000(1.5)^10
A = 12000*2.8561
A ≈ $13,248.97
Therefore, the answer is a. $13,248.97.