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Tamara invested $13,000 in a money market account with an interest rate of 2.25% compounded semiannually....

Tamara invested $13,000 in a money market account with an interest rate of 2.25% compounded semiannually. Three years later, Tamara withdrew the full amount to put toward the down payment on a new house. How much did Tamara withdraw from the account?
Tamara withdrew $
(Round to the nearest cent as needed.)

Answer

To find out how much Tamara withdrew, we use the formula for compound interest:

A = P(1 + r/n)^(nt)

Where:

  • P = principal amount ($13,000)
  • r = annual interest rate (2.25% or 0.0225)
  • n = number of times interest is compounded per year (2 for semiannually)
  • t = number of years (3)

Plugging in the values:

A = 13000(1 + 0.0225/2)^(2*3)

A = 13000(1 + 0.01125)^6

A = 13000(1.01125)^6

A = 13000 * 1.069858

A ≈ $13,908.15

Tamara withdrew approximately $13,908.15.

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