Question

Suppose Kaitlin places $6500 in an account that pays 12% interest compounded each year.

Answer 1

$\bf ~~~~~~ \textit{Compound Interest Earned Amount \underline{for 1 year}} \\\\ A=P\left(1+\frac{r}{n}\right)^{nt} \quad \begin{cases} A=\textit{accumulated amount}\\ P=\textit{original amount deposited}\dotfill &\ 6500\\ r=rate\to 12\%\to \frac{12}{100}\dotfill &0.12\\ n= \begin{array}{llll} \textit{times it compounds per year}\\ \textit{annually, thus once} \end{array}\dotfill &1\\ t=years\dotfill &1 \end{cases}$

$\bf A=6500\left(1+\frac{0.12}{1}\right)^{1\cdot 1}\implies A=6500(1.12)\implies A=7280 \\\\[-0.35em] ~\dotfill$

$\bf ~~~~~~ \textit{Compound Interest Earned Amount \underline{for 2 years}} \\\\ A=P\left(1+\frac{r}{n}\right)^{nt} \quad \begin{cases} A=\textit{accumulated amount}\\ P=\textit{original amount deposited}\dotfill &\ 6500\\ r=rate\to 12\%\to \frac{12}{100}\dotfill &0.12\\ n= \begin{array}{llll} \textit{times it compounds per year}\\ \textit{annually, thus once} \end{array}\dotfill &1\\ t=years\dotfill &2 \end{cases}$

$\bf A=6500\left(1+\frac{0.12}{1}\right)^{1\cdot 2}\implies A=6500(1.12)^2\implies A=8153.6$