Homework Answers
Formula for compound interest is:
A = P x (1+r/n) nt
A = Future amount
P = Principal amount = $ 6,000
r = Interest rate = 8 % or 0.08
n = Annual compounding frequency = 2
t = Number of years money invested = 2
A = $ 6,000 x (1+0.08/2)2x2
= $ 6,000 x (1+0.04)4
= $ 6,000 x (1.04)4
= $ 6,000 x 1.16985856
= $ 7,019.15136 or $ 7,019.15
Colin will be able to purchase the scooter as the deposited money will be more than $ 7,000 in two years.
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