Question

Leslie? Mosallam, who recently sold her? Porsche, placed ?$9 comma 800 in a savings account paying annual compound interest of 6 percent. a.??Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 3?, 7?, and 17 ?year(s). b.??Suppose Leslie moves her money into an account that pays 8 percent or one that pays 10 percent. Rework part ?(a?) using 8 percent and 10 percent. c.??What conclusions can you draw about the relationship between interest? rates, time, and future sums from the calculations you just? did? a.??After placing ?$9 comma 800 in a savings account paying annual compound interest of 6 percent?, the amount of money that will accumulate if Leslie leaves the money in the bank for 3 ?year(s) is ?$ nothing. ?(Round to the nearest? cent.)

Answer 1

Formula for compound interest is

Amount = P * (1+r)^n

P is the principal amount

r is the rate per time period

n is the number of time periods

Amount of money Leslie accumulates in 3 years at 6% = $9800 * (1+6%)^3 = $11671.96

Amount of money Leslie accumulates in 7 years at 6% = $9800 * (1+6%)^7 = $14735.58

Amount of money Leslie accumulates in 17 years at 6% = $9800 * (1+6%)^17 = $26389.17

Below is the amount accumulated at various rates and time periods, in tabular format:

Time	3	7	17
Interest
6%	11671.96	14735.58	26389.17
8%	12345.18	16795.48	36260.18
10%	13043.80	19097.43	49533.81

Every increase in interest rate or time will lead to an increase in the amount. However, that change in amount will not be directly proportional to the increase in interest rate or time period due to the compounding of interest.

For example, the amount Leslie is accumulating for leaving $9800 for 3years at 6% is substantially less than leaving the same amount for 17 years at 10%.