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Answer:
G) $48,357.57
Step-by-step explanation:
The future value formula can be used to find the account value:
FV = P(1 +r)^t
where P is invested at annual rate r for t years.
FV = $50,000(1.07^10) ≈ $98,357.57
The amount of interest earned is the difference between this value and the value of the initial investment:
interest = $98,357.57 -50,000 = $48,357.57
Hank earned $48,357.57 in interest after 10 years.
_____
At 7% interest, the "rule of 72" tells you the doubling time of the account is about 72/7 = 10.3 years. That is the account value will be not quite double the original investment after 10 years. So, the amount of interest earned is only slightly less than $50,000. If the account earned simple interest, the interest earned would be $35,000. Only one answer choice is more than $35,000 and less than $50,000.
