Respuesta :
Using compound interest, it is found that she will earn $23 in interest during the 18-month period.
What is compound interest?
The amount of money earned, in compound interest, after t years, is given by:
[tex]A(t) = P\left(1 + \frac{r}{n}\right)^{nt}[/tex]
In which:
- A(t) is the amount of money after t years.
- P is the principal(the initial sum of money).
- r is the interest rate(as a decimal value).
- n is the number of times that interest is compounded per year.
The parameters in this problem are given as follows:
[tex]P = 1200, r = 0.0125, n = 12, t = 1.5[/tex].
The amount of money at the end of the 18 months will be of:
[tex]A(t) = P\left(1 + \frac{r}{n}\right)^{nt}[/tex]
[tex]A(t) = 1200\left(1 + \frac{0.0125}{12}\right)^{12(1.5)}[/tex]
A(t) = $1,223.
The amount of interest earned is:
I = $1,223 - $1,200 = $23.
More can be learned about compound interest at https://brainly.com/question/25781328
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