Suppose that is placed in a savings account at an annual rate of , compounded semiannually. Assuming that no withdrawals are made, how long will it take for the account to grow to

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Answer:

6 months

Explanation:

Savings accounts earn compound interest, where the interest is calculated based on the principal and all accumulated interest. Usually, savings accounts average percentage yield is 1% and is compounded onto the principal amount every cycle. These cycles can be annually or semiannually. Therefore since this account is compounded semiannually, the account total will grow by 1% every 6 months.