Answer:
(a) There is $1740.88 in Mary's account after 2 years
(b) The interest earned on Mary's investment after 2 years is $40.88
Step-by-step explanation:
Let us revise the rule of the compound interest
→ [tex]A=P(1+\frac{r}{n})^{nt}[/tex] , where
- A is the future value of the investment/loan, including interest
- P is the principal investment amount
- r is the annual interest rate (decimal)
- n is the number of times that interest is compounded per unit t
- t is the time the money is invested or borrowed for
∵ She invested $1700
∴ P = 1700
∵ The rate is 1.19%
∴ r = 1.19/100 = 0.0119
∵ It is compounded quarterly
∴ n = 4
∵ She decided to invest her money for 2 years
∴ t = 2
Let us substitute these values in the rule above to find her new amount of money in her account
→ [tex]A=1700(1+\frac{0.0119}{4})^{4(2)}[/tex]
→ [tex]A=1700(1.002975)^{8}[/tex]
→ [tex]A=1740.883806[/tex] dollars
Round it to the nearest cent → means 2 decimal places
→ A = $1740.88
(a) There is $1740.88 in Mary's account after 2 years
The interest amount is the difference between the new amount and the initial amount
[tex]I=A-P[/tex]
∵ P = 1700
∵ A = 1740.88
∴ [tex]I=1740.88-1700[/tex]
∴ I = $40.88
(b) The interest earned on Mary's investment after 2 years is $40.88
