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find the future value of each deposit if the account pays (a) simple interest (b) interest compounded annually round to the nearest cent as needed

find the future value of each deposit if the account pays (a) simple interest (b) interest-example-1

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Answer:

Given that;

The account has $900 at 6% for 3 years.

a) For simple interest

The future value will be;


\begin{gathered} F=P+I \\ F=P+\text{Prt} \\ F=P(1+rt) \\ P=\text{ \$900} \\ r=0.06 \\ t=3 \\ F=\text{ \$900(1+0.06(3))} \\ F=\text{ \$900(1+0.18)} \\ F=\text{ \$900(1.18)} \\ F=\text{ \$1,062} \end{gathered}

Therefore, the future value is;


\text{ \$1,062}

b) For compound interest.

The future value will be;


\begin{gathered} F=P(1+(r)/(n))^(nt) \\ P=\text{ \$900} \\ r=0.06 \\ n=1 \\ t=3 \\ F=\text{ \$900(1+}(0.06)/(1))^(1(3)) \\ F=900(1.06)^3 \\ F=\text{ \$1,071.91} \end{gathered}

Therefore, the future value will be;


F=\text{ \$1,071.91}

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