Question

You have ​$4,800 to invest today at 8​% interest compounded annually.

a.  Find how much you will have accumulated in the account at the end of​ (1) 2 ​years, (2) 4 ​years, and​ (3) 6 years.

b.  Use your findings in part a to calculate the amount of interest earned in​ (1) the first 2 years​ (years 1 to 2​), ​(2) the second 2 years​ (years 3 to 4​), and​ (3) the third 2 years​ (years 5 to 6​).

c.  Compare and contrast your findings in part b. Explain why the amount of interest earned increases in each succeeding 2-year period.

Answer 1