Question

Use the compound interest formula to compute the total amount accumulated and the interest earned.$8000 for 2 years at 6.5% compounded monthly.....The total amount accumulated after 2 years is $(Round to the nearest cent as needed.)

Answer 1

The formula of compound interest is:

$A(t)=p(1+\frac{r}{n})^{nt}$

where,

A(t)= Account value.

t=time

p=starting amount

r=rate

n= number of compounding periods in year.

so the value is

p=8000

t=2

r=6.5%

n=1/12

Amount after 2 year is:

$\begin{gathered} A(t)=p(1+\frac{r}{n})^{nt} \\ =8000(1+\frac{6.5}{\frac{1}{12}})^{\frac{4}{12}} \\ =8000(1+78)^{\frac{1}{3}} \\ =8000\times4.29 \\ =34326.72 \end{gathered}$

After 2 year amount is 34327 .