Question

3.

Find the Compound Amount.
Round to the nearest cent.

Amount = $7,200
Rate = 4%
Compounded = Annually
Time (Years) = 8


4.
Find the Interest Earned.
Round to the nearest cent.

Amount = $7,200
Rate = 4%
Compounded = Annually
Time (Years) = 8

Answer 1

3)
Principal Amount = P = $7200
Interest rate = r = 4% = 0.04
Time = t = 8 years

Formula for compounding is:


`A=P (1+r)^(t)`

Using the values, we get:


`A=7200 (1+0.04)^(8)=9853.70`

Therefore, the compounded amount will be $9853.70

4)
Principal Amount = P = $7200
Compounded Amount = A = $9853.70

Interest Earned = Compounded Amount - Principal Amount
So,
Interest Earned = 9853.70 - 7200 = $2653.70

Therefore, $2653.70 will be earned as interest over a period of 8 years.