Answer:
(a) At the end of one year, the amount is $7020
(b) At the end of 2 years, the amount is $7581.6
Step-by-step explanation:
To solve this problem, we need to use the compound interest formula:

Where:
• P is the initial amount
,
• r is the rate of annual compounding in decimal
,
• t is the time in years
,
• A is the amount after t years
In this case,
P = $6500
r = 0.08 (to convert 8% to decimal, we divide by 100. 8/100 = 0.08)
To solve (a), t = 1 (one year of compounding):

After 1 year, the amount is %7020
To solve (b), t = 2:

After 2 years, the amount is $7581.6