Question

Use the compound interest formula to compute the total amount accumulated and the interest earned.$8000 for 2 years at 6.5% compounded monthly.....The total amount accumulated after 2 years is $(Round to the nearest cent as needed.)

Answer 1

The formula of compound interest is:

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

where,

A(t)= Account value.

t=time

p=starting amount

r=rate

n= number of compounding periods in year.

so the value is

p=8000

t=2

r=6.5%

n=1/12

Amount after 2 year is:

`\begin{gathered} A(t)=p(1+(r)/(n))^(nt) \\ =8000(1+(6.5)/((1)/(12)))^{(4)/(12)} \\ =8000(1+78)^{(1)/(3)} \\ =8000*4.29 \\ =34326.72 \end{gathered}`

After 2 year amount is 34327 .