Question

If $29,000 is invested in an account for 30 years. Calculate the total interest earned at the end of 30 years if the interest is:

(a) 6% simple interest: $
(b) 6% compounded annually: $
(c) 6% compounded quarterly: $
(d) 6% compounded monthly: $
Round your answers to the nearest cent.

Answer 1

The total interest earned at the end of 30 years for different interest rates can be calculated using the formulas for simple interest and compound interest.

Step-by-step explanation:

In order to calculate the total interest earned at the end of 30 years for different interest rates, we can use the formulas for simple interest and compound interest.

(a) For simple interest, we can use the formula: Total Interest = Principal * Rate * Time. Plugging in the values, we get: Total Interest = $29,000 * 0.06 * 30 = $52,200.

(b) For compound interest compounded annually, we can use the formula: Total Interest = Principal * (1 + Rate)^Time - Principal. Plugging in the values, we get: Total Interest = $29,000 * (1 + 0.06)^30 - $29,000 = $93,734.43.

(c) For compound interest compounded quarterly, we can divide the time period by 4 and use the same formula. Plugging in the values, we get: Total Interest = $29,000 * (1 + 0.06/4)^(4*30) - $29,000 = $99,384.93.

(d) For compound interest compounded monthly, we can divide the time period by 12 and use the same formula. Plugging in the values, we get: Total Interest = $29,000 * (1 + 0.06/12)^(12*30) - $29,000 = $100,234.82.