Step-by-step explanation:
The formula for compounded interest is given by
[tex]A = P\left(1 + \dfrac{r}{n}\right)^{nt}[/tex]
where
A = amount of money after a time t
P = principal or initial amount of money
r = interest rate in decimal form
n = number of times money bnb is compounded per unit time
t = unit time
a) For this problem, P = $6000, n = 1 since the money is compounded once a year, t = 1 year and r = 0.18 so after one year, Lisa's money amounts to
[tex]A = (\$6000)\left(1 + \dfrac{0.18}{1}\right)= \$7,080[/tex]
b) After two years, the money is still compounded yearly so n = 1 but t = 2 years so Lisa's money amounts to
[tex]A = (\$6000)\left(1 + \dfrac{0.18}{1}\right)^{2} = \$8354.40[/tex]
Step-by-step explanation:
a)
Principal = $6000
Rate = 18%
Time = 1 year
A = P(1 + r/100)¹
A = 6000(1 + 18/100)
A = 6000(100 + 18/100)
A = 6000 × 118/100
A = 60 × 118
A = 7080
b)
Principal = $6000
Rate = 18%
Time = 2 years
A = P(1 + r/100)²
A = 6000(1 + 18/100)²
A = 6000(100 + 18/100)²
A = 6000(118/100)²
A = 6000 × 118/100 × 118/100
A = 6 × 118 × 118/10
A = 8354.4
