Question

Merle Fonda opened a new savings account. She deposited $40,000 at 10 percent compounded semiannually. At the start of the fourth year, Merle deposits an additional $20,000 that is also compounded semiannually at 10 percent. At the end of 6 years, the balance in Merle's account is:

Answer 1

Nearly 98,636.

First Half Second Half
Year Amount Interest Amount Interest Amount
1 40,000 2,000 42,000 2,100 44,100
2 44,100 2,205 46,305 2,315 48,620
3 48,620 2,431 51,051 2,553 53,604
4 73,604 3,680 77,284 3,864 81,148
5 81,148 4,057 85,206 4,260 89,466
6 89,466 4,473 93,939 4,697 98,636