Question

K= 12, r=4%, po=$10,000, n=25 using the compound interest formula

Answer 1

The compound interes formula is given by:

`P_N=P_0(1+(r)/(k))^(Nk)`

where P0 is the principal (the initial amount), r is the interes rate (in decimal form), k is the number of times the interest is compounded and N is the time elapsed.

Plugging the values given we have:

`\begin{gathered} P_N=10000(1+(0.04)/(12))^(12\cdot25) \\ =27,137.65 \end{gathered}`

Therefore the future amount is $27,137.65 and the interest earned is $17,137.65.