Ex 2 Brenda invests $5000 into an account that offered 3.4% interest compounded semi - annually. a) Calculate the amount of money that Brenda has in the account after 6 years. Luke also invested $5000 into an account that offered r% interest compounded annually. After 6 years he had $6250 in his account. Calculate r.

A] Brenda's amount after 6 years will be given by:

FV=P (1+r/100*n) ^nt

where

P=principle amount

r=rate

n=number of terms

t=time

thus

FV=5000 (1+3.4 / (2*100)) ^ (2*6)

FV=5000 (1.017) ^12

FV=$6120.987

The amount of 6 years will be $6120.987

b. The rate at which Luke invested will be given by:

FV=p (1+r/100) ^n

FV=$6250

p=5000

n=6 years

r=?

6250=5000 (1+r/100) ^6

solving for r we get

1.25 = (1+r/100) ^6

1.037891=1+r/100

0.037891=r/100

r=3.7891%