Chapter SH, Problem 7.7.11EP

To determine

To calculate:To find the total amount to the nearest cent if the interest is compounded annually

Answer to Problem 7.7.11EP

Amount is $\$11726.10$

Explanation of Solution

Given information: $\$10500$ at $3.75\%$ for $3$ years

Formula used:

Compound interest formula is

  $A=P{\left(1+\frac{R}{100}\right)}^t$

Where,

  $A=$ Amount

  $P=$ Principal

  $R=$ Rate of Interest

  $T=$ Time in years

Calculation:

Given that $\$10500$ at $3.75\%$ for $3$ years

Thus,

  $\begin{array}{l}P=\$10500\\ R=3.75\%\\ T=3years\end{array}$

Amount is calculated using

  $A=P{\left(1+\frac{R}{100}\right)}^t$

Substituting the values,

  $\begin{array}{l}A=10500{\left(1+\frac{3.75}{100}\right)}^3\\ A=10500{\left(1+0.0375\right)}^3\\ A=10500{\left(1.0375\right)}^3\\ A=10500\left(1.11677\right)\\ A=11726.10\end{array}$

Conclusion:

Hence, amount is $\$11726.10$