Question

Jimmy invests $2500 in an account with a 5% interest rate, making no other deposits or withdrawals. What will Jimmy’s account balance be after 8 years if the interest is compounded 6 times each year?
URGENT PLEASE

Answer 1

Answer:

We conclude that the total amount accrued, principal plus interest,  from compound interest on an original principal of  $2500 at a rate of 5% per year compounded 6 times per year over 8 years is $3723.38.

Step-by-step explanation:

Given

Principle P = $2500

Interest rate r = 5% = 0.05

Time period t = 8 years

To determine

Accrue Amount A = ?

Using the compound interest equation

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

where:

A represents the Accrue Amount

P represents the Principal Amount

r represents the interest rate

t represents the time period in years

n represents the number of compounding periods per unit t

Important tip:

• Given that the interest is compounded 6 times each year, therefore, the value of n = 6.

now substituting P = 2500, r = 0.05, t = 8 and n = 6 in the equation

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

$A=2500\left(1+\frac{0.05}{6}\right)^{\left(6\right)\left(8\right)}$

$\:A=2500\left(1+\frac{0.05}{6}\right)^{48}$

$A=2500\times 1.48935$      ∵  $\left(1+\frac{0.05}{6}\right)^{48\:\:}=1.48935$

$A=\:3723.38$ $

Therefore, we conclude that the total amount accrued, principal plus interest,  from compound interest on an original principal of  $2500 at a rate of 5% per year compounded 6 times per year over 8 years is $3723.38.