Question

The amount that results when $6,000 is compounded at 7% annually over eight years. the interest earned in this case.

Answer 1

The Final Investment Value is
`\$10,309.12`

The interest earned is
`\$4,309.12`

Explanation:

The compound interest formula is equal to

`A=P(1+(r)/(n))^(nt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

`t=8\ years\\ P=\$6,000\\ r=0.07\\n=1`

substitute in the formula above

`A=6,000(1+(0.07)/(1))^(1*8)`

`A=\$10,309.12`

Find the interest earned

`I=A-P`

`I=\$10,309.12-\$6,000=\$4,309.12`