Question

The principal represents an amount of money deposited in a savings account subject to compound interest at the given rate.

Answer 1

Answer:

A) Amount in the account after 3 years = $ 7, 883.14

B)  Interest earned = $ 883.14

Step-by-step explanation:

The formula to be used is given as

A = P ( 1 + r/n)^nt

A = final amount

P = initial principal balance

r = interest rate

n = number of times interest applied per time period

t = number of time periods elapsed

In the question we are given the following values :

A = final amount = Unknown

P = initial principal balance = $7,000

r = interest rate = 4% = 0.04

n = number of times interest applied per time period = semi annually , n= 2

t = number of time periods elapsed = 3 years

A) Find how much money there will be in the account after the given number of years.

A = P ( 1 + r/n)^nt

A = $7,000 (1 + 0.04/2)²×³

A = $7,000( 1+ 0.04/2)⁶

A = $7,000( 1.02)⁶

A = $ 7,883.14

The amount in the account after 3 years = $ 7,883.14

B. Find the interest earned.

To find the interest earned, we use the formula

A = P + I where

P (principal) = $ 7,000.00

A (Amount after 3 years) = $ 7,883.14

I = A - P

I = $ 7,883.14 - $ 7,000.00

I =$ 883.14

The interest earned = $ 883.14