Answer
See below
Work Step by Step
(a)
Calculation of future value of amount can be done with the mentioned formula:
\[A=P\times {{\left( 1+r \right)}^{t}}\]
Where A denotes the Future value of the amount, P denotes the Principal amount, r denotes the rate of interest, and t denotes the number of years.
Compute the future value of amount by substituting the values in the formula as mentioned below:
\[\begin{align}
& A=P\times {{\left( 1+r \right)}^{t}} \\
& =\$7,000\times{{\left(1+0.03\right)}^{5}}\\&=\$7,000\times\left(1.1593\right)\\&=\$8,114.92\end{align}\]
Hence, the future value of the amount is\[\$8,114.92\].
(b)
Computation of the interest amount can be done by deducting the Principal amount (P) from the future value (A) of the loan. Compute the interest amount as mentioned below:
\[\begin{align}
& \text{Interest amount}=A-P \\
& =\$8,114.92-\$7,000\\&=\$1,114.92\end{align}\]
Hence, the interest amount is\[\$1,114.92\].
