Basic College Mathematics (9th Edition)

Published by Pearson
ISBN 10: 0321825535
ISBN 13: 978-0-32182-553-7

Chapter 6 - Percent - 6.8 Compound Interest - 6.8 Exercises: 36

Answer

(a) $\$57,457.3$ (b) $\$7,457.3$

Work Step by Step

(a) We look at the table on page 453 in the textbook. We look up the column "3 years" and the row "4% interest" in the table. This gives us the value "1.1249". We multiply the principal ($\$25000$) by this number: $25000*1.1249=\$28122.5$ Next, Christine deposits another $\$25000$ for 2 more years. We look up "4%" and "2 years" in the same table to get "1.0816". We multiply this by the current total accumulated: $(28122.5+25000)*1.0816=\$57,457.3$ Thus Christine will have $\$57,457.3$ after 5 years. (b) To find the total interest earned, we subtract from the total in part (a) the original principal invested ($\$25000$) and the added deposit (another $\$25000$): $57457.3-25000-25000=\$7457.3$
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