12
QuizMultiple Choice

Personal Savings and Consumer Credit: Part Two — Test

Question 12 • Advanced Financial Algebra

Linda is setting up an education fund for her daughter. She opts for a savings plan with a 3.5% annual interest rate, compounded semiannually. Linda commits to depositing $⁢200 every six months and will continue for 7 years. What will be the total amount in Linda's education fund after 7 years? Round your answer to the nearest dollar. Use the periodic deposit future value formula A=(P⋅((1+(r)/(n))^n⋅t−1))/((r)/(n))

Answer
A
3 dollars comma 130
B
3 dollars comma 135
C
3 dollars comma 145
D
3 dollars comma 142

Explanation

There are 2 compounding periods per year for 7 years, so the total number of periods is 2 × 7 = 14. Using the given formula, A = 200 × ((1 + 0.035/2)^14 − 1) ÷ (0.035/2) ≈ $3,141.97. Rounded to the nearest dollar, the fund will contain $3,142, which is choice D.

AI-written and checked against the verified answer.

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