*solve execises by using compounded interest formula
Principal $ 700
Time period 8years
nominal rate (%) 1.5
Interest compounded monthly
Compound amount ?
Compounded interest ?
*need to find the compound amount and compound interest
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Umm Me and my friend posting cause we needed help!
$1200.00
To find the compound amount and the compounded interest, we can use the following formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = The compound amount
P = The principal (initial amount)
r = The nominal interest rate (expressed as a decimal)
n = The number of times interest is compounded per year
t = The time period in years
In this case, we have:
P = $700
r = 1.5% = 0.015 (expressed as a decimal)
n = 12 (compounded monthly)
t = 8 years
Using the formula, we can calculate the compound amount and the compounded interest.
1. Compound Amount (A):
A = $700(1 + 0.015/12)^(12*8)
Calculate inside the parentheses: 0.015/12 = 0.00125
Calculate the exponent: 12*8 = 96
A = $700(1.00125)^96
Now calculate (1.00125)^96 using a calculator:
A ≈ $700(1.135994)
A ≈ $795.19
Therefore, the compound amount after 8 years is approximately $795.19.
2. Compounded Interest:
Compounded Interest = A - P
Compounded Interest = $795.19 - $700
Compounded Interest ≈ $95.19
Therefore, the compounded interest after 8 years is approximately $95.19.
Using the compounded interest formula, we have found that the compound amount is approximately $795.19 and the compounded interest is approximately $95.19.