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15 October, 11:03

Maria invests $6,931 in a savings account with a fixed annual interest rate of 6% compounded 2 times per year. What will the account balance be after 4 years?

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  1. 15 October, 12:06
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    Account balance after 4years = $8,779.98

    Step-by-step explanation:

    To find the account balance after 4years,

    We apply the compound interest formula:.

    I. e:

    A = P (1+r/n) ^ (nt)

    Where

    A = Account balance

    P = principal (investment)

    r = interest rate

    n = number of times compounded in a year

    t = time (in years)

    In this case

    A = ?

    P = $6,931

    r = 6%

    n = 2 (two times per year)

    t = 4years

    Therefore

    A = P (1+r/n) ^ (nt)

    A = 6,931 (1+0.06/2) ^ (2*4)

    A = 6,931 (1+0.03) ^8

    A = 6,931 (1.03) ^8

    A = 6,931 (1.2668)

    A = $8,779.98
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