Question

suppose 7,330 dollars is invested at 14.8% per annum for 10 years compounded monthly, how many dollars will be earned in interest during those 10 years, to the nearest cent

Answer 1

$24,580.12

Explanation:

Lets use the compound interest formula to solve:

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

P = initial balance

r = interest rate (decimal)

n = number of times compounded annually

t = time

First, change 14.8% into a decimal:

14.8% ->
`(14.8)/(100)` -> 0.148

Since the interest is compounded monthly, we will use 12 for n. Lets plug in the values now:

`A=7,330(1+(0.148)/(12))^(12(10))`

`A=31,910.12`

Now subtract that number from our original amount invested:

`31,910.12-7,330=24,580.12`

The dollars earned in interest is $24,580.12