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

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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) About Me  (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 = +P%281%2Br%2Fn%29%5E%28nt%29  
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

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