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? a. $2,896.27 b. $84.27 c. $525.27 d. $146.27

d. $146.27

Explanation:

For computing the interest earned, first we have to calculate the future value which is shown below:

Future value = Present value * (1 + rate) ^number of years

where,

Present value = $2,750

Rate = 5.25% : 2 = 2.625%

Number of years = 1 year * 2 = 2 years

So, the future value

= $2,750 * (1 + 2.625%) ^2

= $2,750 * 1.0531890625

= $2,896.27

Now the interest earned would be

= $2,896.27 - $2,750

= $146.27