Question

If you deposit ​$2,800 today into an account earning an annual rate of return of 8 ​percent, what would your account be worth in 35 years​ (assuming no further​ deposits)? In 40 ​years?

a. If you deposit ​$2,800 today into an account earning an annual rate of return of 8 ​percent, what would your account be worth in 35 ​years?

__________________ ​(Round to the nearest​ cent.)

b. If you deposit ​$2,800 today into an account earning an annual rate of return of 8 ​percent, what would your account be worth in 40 ​years?

__________________ ​(Round to the nearest​ cent.)

Answer 1

It is very important to decide that interest is being calculated by which process i.e.simple interest or compound interest.Banks can use any of the process depending upon the sum and tenure.Usually interest is calculated using the process of compound interest.

If the interest is calculated using compound interest:

P=$2,800; R=8%;

After 35 years,the account would worth $41,398.960​​​.This shows the total amount in which $38,598.960 is the total compound interest.

After 40 years,the account would worth $60,828.660.This shows the total amount in which $58,028.660 is the total compound interest.

If the interest is calculated using simple interest:

P= 2,800 / R = 8% | T = 38 years Simple interest - PXRXT CS.IO como 21820X8x35_3649exe $7,840 Total Amount ofter 35 years = pt so I °2,810 + 7,840 = $10,640 b) Again, P = 2,800 R = 80 So I = PXRXI los_ 224822X 8 X 40 40x 28.48 _ =$8,960 Total Amount ofter yogrs principal & SoT 2,500 +8,960 s $1760