Thank you for the opportunity to help you with your question! I hope to help you out the best I can!
The question uses compound interest, which the formula is: A = P(1 + r/n)^nt; where A is the amount accumulated, P is the principal amount, r is the interest rate, n is the compounds per period and t is the number of periods. r must be in a decimal (so 8% / 100 = 0.08).
For the first part of the question, we are going to find A.
A = 31,000 (1+ 0.08/1)^(1)(6)
A = 31,000 (1.08)^6
A = 31,000 (1.58687432294)
A = 49,193.10 ; Therefore after 6 years, the total amount is $49, 193. 10
For the second part of the question, we just subtract A from the P amount (final amount minus initial amount).
Therefore: A - P = r
49, 193.10 - 31, 000 = 18, 193.10
Therefore, the interest earned in the period of time is: $18, 193.10!
Please let me know if you need any clarification. I'm always happy to answer your questions. Thank you very much!
Jul 9th, 2015
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