Question

suppose 7,330 dollars is invested at 14.8% per annum for 10 years compounded monthly, how many dollars will be earned in interest during those 10 years, to the nearest cent

Answer 1

Answer:

$24,580.12

Step-by-step explanation:

Lets use the compound interest formula to solve:

$A=P(1+\frac{r}{n} )^{nt}$

P = initial balance

r = interest rate (decimal)

n = number of times compounded annually

t = time

First, change 14.8% into a decimal:

14.8% -> $\frac{14.8}{100}$ -> 0.148

Since the interest is compounded monthly, we will use 12 for n. Lets plug in the values now:

$A=7,330(1+\frac{0.148}{12})^{12(10)}$

$A=31,910.12$

Now subtract that number from our original amount invested:

$31,910.12-7,330=24,580.12$

The dollars earned in interest is $24,580.12