Answer:
• Amount in bank after 5 years = $73,140
• Compound interest = $13,140
Explanation:
The bank pays the interest semi-annually but the interest in quoted annually.
The periodic rate is:
= 4%/2
= 2%
The period will be:
= 5 years * 2 semi annual periods
= 10 semi annual periods.
Amount in bank after 5 years:
= 60,000 * ( 1 + 2%)¹⁰
= $73,140
Compound interest amount is therefore:
= 73,140 - 60,000
= $13,140
