Question

$14,000 is invested for 6 years at an annual simple interest

rate of 12%.
(a) How much interest will be earned?
$

(b) What is the future value of the investment at the end of the 6
years?
$

Answer 1

(a) $10080 will be earned in interest

(b) The future value of the investment at the end of the 6 years will be $24080

Explanation:

Initial Amount = P = $14,000

t = time = 6 years

r = interest rate = 12% = 0.12

(a) How much interest will be earned?

The formula for calculating interest is,

I = (P)(r)(t)

so,

I = (14000)(6)(0.12)

I = 10080

$10080 will be earned in interest

(b) What is the future value of the investment at the end of the 6

years?

The formula for the total future amount is,

A = P + I

so,

A = 14000 + 10080

A = $24080

The future value of the investment at the end of the 6

years will be $24080

Answer 2

(a) I = $14,000(.12)(6) = $10,080

(b) FV = $14,000 + $10,080 = $24,080