Question

Nusrah opens a saving account and deposits R5000 every year starting immediately. How much will she have accumulated after 8 years if the interest is compounded at 8.5% p.a? And how much interest will Nusrah have earned after 8 years?

Answer 1

To calculate the amount accumulated after 8 years with compound interest, use the formula A = P(1 + r/n)^(nt). Nusrah will have accumulated R7844.35 after 8 years with an 8.5% interest rate compounded annually. The interest earned is R2844.35.

Step-by-step explanation:

To calculate the amount accumulated after 8 years with compound interest, we can use the formula A = P(1 + r/n)^(nt), where A is the final amount, P is the principal amount (initial deposit), r is the interest rate (in decimal form), n is the number of times interest is compounded per year, and t is the number of years. In this case, Nusrah deposits R5000 annually, so the principal amount is R5000, the interest rate is 8.5% or 0.085, and it is compounded once per year.

So, using the formula A = R5000(1 + 0.085)^8, we can calculate that Nusrah will have accumulated R7844.35 after 8 years. To calculate the interest earned, we subtract the principal amount from the final amount. In this case, the interest earned is R7844.35 - R5000 = R2844.35.