Respuesta :
In order to determine the balance of the account, use the following formula for the amount of money obtained after t years, basen on a compound interest:
[tex]A=P(1+\frac{r}{n})^{nt}[/tex]where,
P: principal = $12,500
A: amount earnt after t years = ?
r: interest rate in decimal form = 0.045 (4.5%)
n: times at year for the compund interes = 4 (quaterly)
Replace the previous values of the parameters into the formula for A and simplify:
[tex]\begin{gathered} A=12,500(1+\frac{0.045}{4})^{4\cdot8} \\ A=12,500(1+0.01125)^{32} \\ A=12,500(1.01125)^{32} \\ A=12,500(1.430451402) \\ A\approx17,880.64 \end{gathered}[/tex]Hence, the balance after 8 years is approximately $17,880.64 in the account.
The interest earnt by the account is given by the difference between the previous result and the principal invesment:
I = $17,880.64 - $12,500 = $5,380.64
Hence, the interest earnt is $5,380.64
