The equation needed to calculate the compound interest is [tex]A = P(1 +\frac{r}{n} )^{nt}[/tex]
The value of the account after ten years is $9347.62 .
If the account is left alone for 20 years, the amount of interest earned is $6942.76
The compound interest formula is represented as follows;
[tex]A = P(1 +\frac{r}{n} )^{nt}[/tex]
where
Therefore,
where
r = 3.7% = 3.7 / 100 = 0.037
n = 1
t = 10
P = $6500
Hence,
[tex]A = 6500(1+\frac{0.037}{1} )^{1(10)}[/tex]
[tex]A = 6500(1.037)^{10}[/tex]
[tex]A = 6500(1.43809495884)[/tex]
A = 9347.61723247
A = $9347.62
The value of the account after ten years is $9347.62
Interest = 9347.62 - 6500 = 2847.62 dollars
When it is 20 years.
r = 3.7% = 3.7 / 100 = 0.037
n = 1
t = 20
P = $6500
Hence,
[tex]A = 6500(1+\frac{0.037}{1} )^{1(20)}[/tex]
[tex]A = 6500(2.06811711064)[/tex]
A = 13442.7612192
A = $13442.76
Interest = 13442.76 - 6500 = 6942.76 dollars
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