Answer
a. $87,025$ dollars.
b. $63,025$ dollars.
Work Step by Step
a. Given
$P=50, r=0.055, t=65-25=40, n=12$
we use the annuity formula:
$A=\frac{P[(1+\frac{r}{n})^{nt}-1]}{\frac{r}{n}}=\frac{50[(1+\frac{0.055}{12})^{12(40)}-1]}{\frac{0.055}{12}}\approx87,025$ dollars.
b. The amount of interest earned is the difference between the final amount and the total investment. Thus, we have
$I=87,025-50(12)(40)=63,025$ dollars.
