Question

Jimmy invests $2500 in an account with a 5% interest rate, making no other deposits or withdrawals. What will Jimmy’s account balance be after 8 years if the interest is compounded 6 times each year?

URGENT PLEASE

Answer 1

We conclude that the total amount accrued, principal plus interest, from compound interest on an original principal of $2500 at a rate of 5% per year compounded 6 times per year over 8 years is $3723.38.

Explanation:

Given

Principle P = $2500

Interest rate r = 5% = 0.05

Time period t = 8 years

To determine

Accrue Amount A = ?

Using the compound interest equation

`A\:=\:P\left(1\:+\:(r)/(n)\right)^(nt)`

where:

A represents the Accrue Amount

P represents the Principal Amount

r represents the interest rate

t represents the time period in years

n represents the number of compounding periods per unit t

Important tip:

• Given that the interest is compounded 6 times each year, therefore, the value of n = 6.

now substituting P = 2500, r = 0.05, t = 8 and n = 6 in the equation

`A\:=\:P\left(1\:+\:(r)/(n)\right)^(nt)`

`A=2500\left(1+(0.05)/(6)\right)^(\left(6\right)\left(8\right))`

`\:A=2500\left(1+(0.05)/(6)\right)^(48)`

`A=2500* 1.48935` ∵
`\left(1+(0.05)/(6)\right)^(48\:\:)=1.48935`

`A=\:3723.38` $

Therefore, we conclude that the total amount accrued, principal plus interest, from compound interest on an original principal of $2500 at a rate of 5% per year compounded 6 times per year over 8 years is $3723.38.