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
