Question

Lizbeth deposited $6200 into a savings account for which interest is compounded monthly at a rate of 2.37%. How much interest will she earn after 8 years?

Answer 1

A=6200(1+0.0237/12)^12*8
A=7,492.95
Amount earned=7492.95-6200=1,292.95

Answer 2

Answer: $1292.95

Step-by-step explanation:

Given: The principal investment deposit = P = $6,200

The annual interest rate= 2.37%

The annual interest rate (decimal)  r=0.0237

The number of times that interest is compounded per year

= 12

The number of years the money is invested for= 8 years

The formula for annual compound amount is:

$A=P(1+\frac{r}{n})^{nt}\\\\\Rightarrow\ A=6200(1+\frac{0.0237}{12})^{12\times8}\\\\\Rightarrow\ A=6200(1.001975)^{96}\\\\\Rightarrow\ A=6200( 1.2085399)\\\\\Rightarrow\ A=7492.95$

The amount she earned = A-P=$\ 7492.95-\ 6200=\ 1292.95$