Formula:
A = P (1 + r/n) ^ nt
Calculation:
1. Principal amount (P) = $8000
2. Monthly interest rate (r) = 7.5% / 12 = 0.00625
3. Number of compounding periods per year (n) = 12
4. Number of years (t) = 10
5. Number of compounding periods (n * t) = 12 * 10 = 120
Interest Rate Factor:
1 + 0.00625 = 1.00625
Total Amount Accumulated (A):
A = $8000 (1.00625) ^ 120 ≈ $16,896.52
Interest Earned:
Interest earned = A - P = $16,896.52 - $8000 = $8,896.52
Conclusion:
With monthly compounding, the total amount accumulated after 10 years is approximately $16,896.52, and the interest earned is approximately $8,896.52.
