Question

Suppose that $8000 is placed in an amount that pays 17% interest compounded each year. Assume that no withdraws are made from the account.Follow the instructions below. Do not do any rounding. (A) Find the amount in the account at the end of 1 year(B) find the amount in the account at the end of 2 years

Answer 1

Given:

$8000 is placed in an amount that pays 17% interest compounded each year.

Required:

A) Find the amount in the account at the end of 1 year.

(B) find the amount in the account at the end of 2 years.

Step-by-step explanation:

The amount formula when interest is compound yearly is given as:

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

Where P = principal

r = interest rate

t = time

(a)

`\begin{gathered} A=8000(1+0.17)^1 \\ A=8000(1.17) \\ A=9360 \end{gathered}`

Thus the amount after 1 year is $9360.

(b)

`\begin{gathered} A=P(1+r)^2 \\ A=8000(1+0.17)^2 \\ A=8000(1.17)^2 \\ A=8000(1.3689) \\ A=10,951.2 \end{gathered}`

Thus the amount after 1 year is $10,951.2

Final Answer:

(a) $9360

(b) $10,951.2