Respuesta :
If $11,000 is invested, $33,000 is the value of the investment at the end of 25 years if the interest is 8% simple interest and $75,333.23 is the value of the investment at the end of 25 years if the interest is 8% compounded annually. This can be obtained by using formulas for simple interest and compound interest.
What is the formulas of simple interest and compound interest?
- Simple interest
A = P(1 +Rt/100) , P = principle amount ,R = rate of interest, t = time(in years)
- Compound interest (annually)
A = P(1 + R/100)^t , P = principal amount, R = rate of interest, t = time(in years)
What is the value of investment?
Given that,
P = $11,000 , R = 8%, t = 25 years
- 8% simple interest
A = P(1 +Rt/100) = [tex]11000(1+\frac{(8)(25)}{100} )[/tex] = $33,000
- 8% compounded annually
A = P(1 + R/100)^t = [tex]11000(1+\frac{8}{100} )^{25}[/tex] = [tex]11000(1.08 )^{25}[/tex] = $75,333.23
Hence If $11,000 is invested, $33,000 is the value of the investment at the end of 25 years if the interest is 8% simple interest and $75,333.23 is the value of the investment at the end of 25 years if the interest is 8% compounded annually.
Learn more about simple interest and compound interest:
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Question: If $11,000 is invested in an account for 25 years. Find the value of the investment at the end of 25 years if the interest is:
(a) 8% simple interest
(b) 8% compounded annually
