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# \$2,000 is deposited in a savings account that pays 6% annual interest

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Re: \$2,000 is deposited in a savings account that pays 6% annual interest [#permalink]
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The question is asking how much worth is 2000 deposited in an account that pays 6% interest compounded semi annually.
Ok so we know that 6% of 2000 = 120 (since 1% is 20).
So if the compounding would have been done annually, then the amount in end is 2120. But because of compounding twice, the amount will be larger than this figure.
The next answer choice that is closest is choice C. D is too far. We can easily pick C
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Re: \$2,000 is deposited in a savings account that pays 6% annual interest [#permalink]
FV = P (1+r/n)^nt

FV = future value of the deposit
P = principal or amount of money deposited
r = annual interest rate (in decimal form)
n = number of times compounded per year
t = time in years.
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Re: \$2,000 is deposited in a savings account that pays 6% annual interest [#permalink]
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Re: \$2,000 is deposited in a savings account that pays 6% annual interest [#permalink]
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