Question

Suppose Jessica places $2000 in an account that pays 19% interest compounded each year. Assume that no withdrawals are made from the account. Follow the instructions below. Do not do any rounding. (a) Find the amount in the account at the end of 1 year. $0 (b) Find the amount in the account at the end of 2 years. S​

Answer 1

Answer:a) $2380

b) $2832.2

Explanation:

Answer 2

a) $2380
b) $2832.2

Explanation:

Compound Interest Formula:

`A=P(1+(r)/(n) )^n^t`

Compounding interest is when it increases exponentially every year. When it increases 19% per year, you multiply by 19% the new amount instead being based off the original value. In this case, after a year, 119% of 2000 would be 2380. Then, you would multiply 2380 by 119% to get the new amount (2832.2), instead of adding 19% of 2000 again (if it were simple interest you would just add 380 again instead of compounding).

A is the final amount after compounding.

P is the principle, or the amount you start with.

R is the interest rate.

t is the number of time periods (in this case 1/2 years).

n is the number of times interest is applied per time period (t) (it's still 1/2 because the interest is applied once per year).