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
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
∵
$
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.
The second option will cost her less than the first one.
Step-by-step explanation:
In order to solve this problem we will create two functions to represent the cost of the car in function of the miles drove by her.
For the first option we have:
For the second option we have:
Since she intends to drive it for 10,000 miles per year for 6 years, then the total mileage she intends to drive her car is 60,000 miles. Applying this to the formula of each car and we have:
The second option will cost her less than the first one.