Answer:
Step-by-step explanation:
Simple interest formula:
A = P(1 + rt)
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount
I = Interest Amount
r = Rate of Interest per year in decimal; r = R/100
t = Time Period involved in months or years
P = $1000
r = 6% = 6/100 = .06
t = 20
A = P(1 + rt)
A = 1000(1 + (.06*20))
A = 1000 (1 + 1.2)
A = 1000 (2.2)
A = $2200
Compounded monthly:
A = P(1 + [tex]\frac{r}{n}[/tex][tex])^{nt}[/tex]
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount)
r = Rate of Interest per year in decimal; r = R/100
n = the number of times that interest is compounded per unit t
t = Time Period involved in months or years
P = $1000
r = 6% = 6/100 = .06
n = 12
t = 20
A = P(1 + [tex]\frac{r}{n}[/tex][tex])^{nt}[/tex]
A = 1000 ( 1 + [tex]\frac{.06}{12}[/tex] [tex])^{12*20}[/tex]
A = 1000 (1 + .005[tex])^{240}[/tex]
A = 1000 ( 1.005[tex])^{240}[/tex]
A = 1000 (3.3102)
A ≈ $3310.20
The balance after 20 years will be 1,300,000cents
The balance in the account after 20 years if compounded monthly is 12,173,957,374cents
The formula for calculating simple interest is expressed as:
SI = PRT
P is the amount invested = $1000
R is the rate (in decimal) = 6% = 0.06
T is the time in years = 20 years
Get the simple interest
SI = 1000 * 0.6 * 20
SI = $12,000
The balance after 20 years will be $1,000 + $12,000 = $13,000
The compound amount formula is expressed as:
A = P(1 + r/t)^nt
A = 1000(1+0.6/12)^12(20)
A = 1000(1+0.05)^240
A = 1000(1.05)^240
A = 121,739,57374cents
Hence the balance in the account after 20 years is 12,173,957,374cents
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