Question

Compound interest Plz help!!!

Answer 1

Answer:

a) $A(t) = 17500(1.0053)^{12t}$

b) The balance after 8 years will be of $29,069.

Step-by-step explanation:

Compound interest:

The compound interest formula is given by:

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

Where A(t) is the amount of money after t years, P is the principal(the initial sum of money), r is the interest rate(as a decimal value), n is the number of times that interest is compounded per year and t is the time in years for which the money is invested or borrowed.

a)

Loan of $17,500 means that $P = 17500$

6.4% interest rate means that $r = 0.064$

Compounded monthly means that $n = 12$. So

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

$A(t) = 17500(1 + \frac{0.064}{12})^{12t}$

$A(t) = 17500(1.0053)^{12t}$

b)

This is A(8). Then

$A(8) = 17500(1.0053)^{12*8} = 29069$

The balance after 8 years will be of $29,069.