Answer:
Compound interest function, [tex]A = P(1 + \frac{r}{n} )^{nt}[/tex]
The amount when compounded annually after 8 years is $[tex]21200.21[/tex]
Step-by-step explanation:
Topic: Compound Interest
To model the situation, we'll make use of the compound interest formula. The formula is as follows:
[tex]A = P(1 + \frac{r}{n} )^{nt}[/tex] ---- This is the compound interest function
Where
r = Rate = 2.5% = 0.025
n = Period = Annually = 1
t = Time = 8 years
P = Principal Amount = $17,400
A = Amount ---- This is the function we want to model
By Substitution, we have
[tex]A = 17,400(1 + \frac{0.025}{1} )^{1*8}[/tex]
[tex]A = 17,400(1 + 0.025)^{8}[/tex]
[tex]A = 17,400(1.025)^{8}[/tex]
[tex]A = 17400 * 1.21840289751[/tex]
[tex]A = 21200.2104167[/tex]
Hence, the amount when compounded annually after 8 years is $[tex]21200.21[/tex] (Approximated)
