Question

8. Oswald Chesterfield Cobblepot invests $5,000 into an account that earns 2.5% interestcompounded monthly.a. How much money is in the account after two years? Use the formula above.Answer:b. How much money in interest was earned?Answer:

Answer 1

$\begin{gathered} C=\text{ \ 5,000} \\ i=2.5\text{ \%=0.025} \\ t=2\text{ years, but one year has 12 months, hence} \\ t=24 \\ F=? \\ F=C(1+i)^t \\ F=(5,000)(1+0.025)^{24} \\ F=(5,000)(1.025)^{24} \\ F=9,043.63 \\ A)\text{ He will have \ 9,043.63 in his account} \\ \\ B)\text{ earned=9,043.63-5,000} \\ earned=4,043.63 \\ He\text{ has earned \ 4,043.63} \end{gathered}$