SOLUTION: Jim invested $15,000 for a period of 2 years at an interest rate of 4.5% compounded annually. What is the amount of interest earned in years 1 and 2 and the value of the invest

Question 1177300: Jim invested $15,000 for a period of 2 years at an interest rate of 4.5% compounded annually.
What is the amount of interest earned in years 1 and 2 and the value of the investment at the end of year 1 and 2 using the simple interest formula and compound interest?
Answer by ewatrrr(24785) (Show Source): You can put this solution on YOUR website!


Hi
Compound Interest:
A = Accumulated Amount
P= principal = 
r= annual rate = .
n= periods per year = 
t= years =
A =   
A(1year) = 15000(1.045)^1 = 15675.00  (I = 675)
A(2years) = 15000(1.045)^2 = 16380.38  I = 1350 - 675 = 705.38 (2nd year)
Simple Interest:
I = P*r*t
15000(.045)(1) = $675
15000(.045)(2) =  1350 - 675 = $675 second year

Wish You the Best in your Studies.

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