Question

Please help me with this question in business math. I don't know how to solve it thank you very much! :)

Answer 1

Since the amount of the money is $7000, then

P = 7000

Since the interest rate is 2.5% and the rate is compounded monthly, then

`\begin{gathered} r=(2.5)/(100*12) \\ r=(1)/(480) \end{gathered}`

Let us use the given rule

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

n is the number of months

A is the total value after the given time

Substitute n by 12 (1 year = 12 months)

`\begin{gathered} A=7000(1+(1)/(480))^(12) \\ A=7177.019199 \end{gathered}`

Round it to the nearest hundredth, then

A = 7177.02 dollars

Since the interest I = A - P, then

`\begin{gathered} I=7177.02-7000 \\ I=177.02 \end{gathered}`

The interest is $177.02

Answer B