Chapter SH, Problem 7.7.10EP

To determine

To calculate:To find the total amount to the nearest cent if the interest is compounded annually

Answer to Problem 7.7.10EP

Amount is $\$17173.50$

Explanation of Solution

Given information: $\$15000$ at $7.0\%$ for $2$ years

Formula used:

Compound interest formula is

  $A=P{\left(1+\frac{R}{100}\right)}^t$

Where,

  $A=$ Amount

  $P=$ Principal

  $R=$ Rate of Interest

  $T=$ Time in years

Calculation:

Given that $\$15000$ at $7.0\%$ for $2$ years

Thus,

  $\begin{array}{l}P=\$15000\\ R=7\%\\ T=2years\end{array}$

Amount is calculated using

  $A=P{\left(1+\frac{R}{100}\right)}^t$

Substituting the values,

  $\begin{array}{l}A=15000{\left(1+\frac{7}{100}\right)}^2\\ A=15000{\left(1+0.07\right)}^2\\ A=15000{\left(1.07\right)}^2\\ A=15000\left(1.1449\right)\\ A=17173.50\end{array}$

Conclusion:

Hence, amount is $\$17173.50$