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23 January, 19:34

An investment of $6,599.20 earns 4.2% interest compounded monthly over 7 years. Approximately how much interest is earned on the investment? a. $2,250.96 b. $4,308.21 c. $6,762.59 d. $8,850.20

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  1. 23 January, 21:13
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    a. $2,250.96

    Step-by-step explanation:

    First, you can determine the total value of the investment after 7 years by using the following formula:

    F=P (1 + (r/n)) ^nt

    F = future value

    P = present value

    r = interest rate

    n = number of times interest is applied per period

    t = number of time periods

    F = 6,599.20 * (1 + (0.042/12)) ^12*7

    F=6,599.20 * (1,0035) ^84

    F = 8,850.16

    Then, you can subtract the initial value of the investment from the future value to find the interest earned:

    $8,850.16-$6,599.20 = $2,250.96

    According to this, the interest that the investment earns is $2,250.96.
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