Question

Please read each question and do why it says please!

Answer 1

Hello!

A) Equation:

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

Variables:

• A = amount

,

• P = principal

,

• r = rate

,

• n = number of periods (12 months)

,

• t = time (iwhole or decimals)

B)

• P = $6500

,

• t = 10 years

,

• r = 3.7% = 0.037

Using the information in the formula:

`\begin{gathered} A=6500(1+(0.037)/(12))^(12\cdot10) \\ \\ A=6500\cdot(1.00030833)^(120) \\ A=$\$9,404.92$ \end{gathered}`

C)

Let's consider the same information as above, just changing the time to 20 years:

`\begin{gathered} A=6500(1+(0.037)/(12))^(12\cdot20) \\ \\ A=6500\cdot(1.00030833)^(240) \\ A=$\$13,608.08$ \end{gathered}`

Let's calculate the difference:

`\$13,608.08-$\$9,404.92$=\$4203.16`