$2,000 at 12% for 20 years

Question

$2,000 at 12% for 20 years

(a) Calculate the future amount if the money were invested at simple interest

(b) Calculate the future amount if the money were invested with annual compounding. (Round your answer to the nearest cent.)

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1 answer
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Answer 1

Reiny answered
12 years ago

a) using simple interest for 20 years

amount = P + Prt
= 2000 + 2000(.12)(20) = 6800

b) -- compound interest (what's actually being done)
Amount = 2000(1.12)^20 = 19292.59