Gracie Shay wants to buy a new Hummer in 5 years. Gracie estimates the cost of the Hummer will be $28,000. If she invests $12,000 now, at a rate of 6 percent compounded semiannually, she:
1.Will have enough money
2.Will have exactly $16,000
3.Will have $18,000
4.Will have $16,126.80
5.None of these

Question

Gracie Shay wants to buy a new Hummer in 5 years. Gracie estimates the cost of the Hummer will be $28,000. If she invests $12,000 now, at a rate of 6 percent compounded semiannually, she:
1.Will have enough money
2.Will have exactly $16,000
3.Will have $18,000
 4.Will have $16,126.80
 5.None of these

anonymous · Answer

6/100 * 12,000 = 720 
5 YEARS * 2 TIMES IN A YEAR * 720 = 7,200 + 12,000 = $ 19,200 
You can see the answer! :)

anonymous · Answer

I think it's more like:
$$$12,000* 1.06^{10} = $21,490.17$$

This is because every time you calculate the interest (which is 6%), it includes the interest already added to the principal. And because it's semiannual over 5 years, you calculate interest 10 times.

anonymous · Answer

$$FV= A/m  * [ (1+(i/m ))^ {m*n} - 1 ]/ (i/m)$$

FV = Future Value
A = Annual lot
i = Annual interest rate
m = times in a year 
n = years

FV = 720 * [1+6% ]^ 10 - 1 / 6% = 21,490 $

hope it useful .