Question

Suppose that $8000 is placed in an account that pays 11% interest compounded each year what's the amount after 1 year ? What's the amount in the account after 2 years

Answer 1

A = $9,760.00

Explanation:

I = A - P = $1,937.50

Equation:

A = P(1 + rt)

Calculation:

First, converting R percent to r a decimal

r = R/100 = 3.875%/100 = 0.03875 per year.

Solving our equation:

A = 10000(1 + (0.03875 × 5)) = 11937.5

A = $11,937.50

The total amount accrued, principal plus interest, from simple interest on a principal of $10,000.00 at a rate of 3.875% per year for 5 years is $11,937.50.