If $12,000 is invested at an annual interest rate of 6 percent, compounded semiannually, what will the total amount be after 4 years, in dollars?

Answer Choices

Correct answer marked below

12,000(1+\frac{0.06}{2})^{8}

Correct

12,000(1+0.06)^4

12,000(1+0.06)

12,000(1-0.06)^2

12,000*1.06

See the full step-by-step explanation

You can see the correct answer above. Sign in for free to unlock the complete worked solution.

Track your performance and improve

Get detailed analytics, unlock full explanations, and move up difficulty tiers as you practice.

Start for free Sign in

Explanation

Preview

Official Explanation

Official

When an investment is compounded semiannually, the interest rate is divided by 2 and the time is multiplied by 2. Therefore, for an investment of $12,000 at an annual…

Read the full explanation

Create free account Sign in

Comments

FlorianFeb 9, 2024

Tricky wording but good practice

SwaminathaJul 18, 2024

thanks for the answer

What this question tests

What it tests

Your ability to spot and extend arithmetic and geometric sequences and work with recursive definitions.

Common trap

Off-by-one errors in indexing (a₀ vs a₁) or confusing an arithmetic difference with a geometric ratio.