(Text form)

1. Use the formula to calculate the total amount accumulated at compound interest in the following cases.

(a) 2000 deposited for 5 years at 7% p.a.

(b) 600 borrowed for 8 years at 12% p.a.

(c) 500 deposited for 20 years at 8.25% p.a.

(d) 10 000 borrowed for 6 months at 14% p.a.

(e) 100 deposited for 18 months at 9.5% p.a.

PLEASE SHOW YOUR SOLUTIONS CLEARLY (I WILL BE NEEDING THEM), THANK YOU!

2.3 Compound Interest Formula It should already be clear that for long periods, the year-on-year method of calculating compound interest is somewhat cumbersome, but fortunately there is a formula. Suppose the compound interest rate is 9%. The amount at the start of each year is treated as 100%, and adding 9% to 100% gives 109%. So adding 9% to any amount of money is equivalent to multiplying that amount by 1.09. Check that 250.00 x 1.09 = 272.50 272.50 * 1.09 = 297.02, and 297.02 * 1.09 = 323.75 100) More generally, adding r% to a sum of money corresponds to multiplying by (1+ If the money is left untouched for 7 years, then the original amount P will be multiplied y (1+100) , so that A is the total amount at the end of that time, 4 = P(1+ 100) (This formula actually works for fractional values of T as well as for whole numbers. The amount of interest, if it is needed, is calculated by subtracting the principal, P, from the total amount.) Exercises 1. Use the formula to calculate the total amount accumulated at compound interest in the following cases. (a) 2000 deposited for 5 years at 7% p.a. (b) 600 borrowed for 8 years at 12% p.a. (c) 500 deposited for 20 years at 8.25% p.a. (d) 10 000 borrowed for 6 months at 14% p.a. (e) 100 deposited for 18 months at 9.5% p.a