Suppose that you earned a bachelor's degree and now you're teaching high school. The school district offers teachers the opportunity to take a year off to earn a master's degreee. To achieve this goal, you deposit $ 5000 at the end of each year in an annuity that pays 6.5 % compounded annually.

a. After 5 years, you will have approximately= $

(Do not round until the final answer. Then round to the nearest dollar as needed.)

b. The interest is approximately= $

(Use the answer from part a to find this answer.)

Question

contestada

Respuesta :

JeanaShupp JeanaShupp · Answer 1 · 2020-10-22T03:23:59+02:00

Answer: a. After 5 years, you will have approximately= $ 6,850.43 .

b. The interest is approximately =$ 1850.43

Step-by-step explanation:

Given: Principal amount (P) = $5000

Rate of interest (r)= 6.5% = 0.065

n= 1 (compounded annually)

a) Time (t) = 5 years

Formula for accumulated amount :

[tex]A=P(1+\dfrac rn)^{nt}[/tex]

Then,

[tex]A=5000(1+0.065)^5\\\\=5000(1.065)^5\\\\=5000(1.37008666342)\\\\\approx \$\ 6850.43[/tex]

Hence, After 5 years, you will have approximately $ 6,850.43 .

b) Compound interest = A-P

= $ 6,850.43 - $ 5,000

= $ 1850.43

Hence, The interest is approximately $ 1850.43.