Thinking Mathematically (6th Edition)

Published by Pearson
ISBN 10: 0321867327
ISBN 13: 978-0-32186-732-2

Chapter 8 - Personal Finance - 8.4 Compound Interest - Exercise Set 8.4 - Page 521: 3

Answer

(a) After four years, there will be \$3655.21 in the account. (b) The interest earned is \$655.21

Work Step by Step

(a) We can use this formula: $A = P~(1+\frac{r}{n})^{nt}$ $A$ is the final amount in the account $P$ is the principal (the amount of money invested) $r$ is the interest rate $n$ is the number of times per year the interest is compounded $t$ is the number of years $A = P~(1+\frac{r}{n})^{nt}$ $A = (\$3,000)~(1+\frac{0.05}{2})^{(2)(4)}$ $A = \$3655.21$ After four years, there will be \$3655.21 in the account. (b) We can find the interest earned. $A - P = \$3655.21 - \$3000 = \$655.21$ The interest earned is \$655.21
Update this answer!

You can help us out by revising, improving and updating this answer.

Update this answer

After you claim an answer you’ll have 24 hours to send in a draft. An editor will review the submission and either publish your submission or provide feedback.