Respuesta :
Compound interest is the adding of interest to the principle sum of a loan or deposit. The amount of money in the account after 2 years is $7426.30, while the interest earned in 2 years is $426.30.
What is compound interest?
Interest on interest, or compound interest, is the adding of interest to the principle sum of a loan or deposit. It's the outcome of reinvesting interest rather than paying it out, so that interest is received on the principal plus previously collected interest in the next quarter.,
[tex]A = P(1+ \dfrac{r}{n})^{nt}[/tex]
where A is the final amount
P is the principal amount
r is the rate of interest
n is the number of times interest is charged in a year
t is the number of years
Given the principal amount is $7,000 while the rate of interest is 3% which is compounded annually.
A. The amount of money in the account after 2 years will be,
A = $7000(1 + 0.03)² = $7426.30
B. The amount of interest earned is will be,
The amount of interest earned = $7426.30 - $7000 = $426.30
Hence, the amount of money in the account after 2 years is $7426.30, while the interest earned in 2 years is $426.30.
Learn more about Compound Interest:
https://brainly.com/question/25857212
#SPJ1
