QuestionAugust 21, 2025

If the value of the principal today is 12,000 and the interest rate is 10.5% what is the total compounding contribution at the end of two years? 100.56 132.30 450.50 125.25

If the value of the principal today is 12,000 and the interest rate is 10.5% what is the total compounding contribution at the end of two years? 100.56 132.30 450.50 125.25
If the value of the principal today is 12,000 and the interest rate is 10.5%  what is
the total compounding contribution at the end of two years?
 100.56
 132.30
 450.50
 125.25

Solution
4.0(220 votes)

Answer

\2652.30 Explanation 1. Identify the formula for compound interest Use the formula A = P(1 + r)^n where A is the amount, P is the principal, r is the rate, and n is the number of years. 2. Calculate the total amount after two years Substitute P = 12000, r = 0.105, and n = 2 into the formula: A = 12000(1 + 0.105)^2. 3. Compute the compound interest contribution Compound interest contribution is A - P. Calculate A and subtract P.

Explanation

1. Identify the formula for compound interest<br /> Use the formula $A = P(1 + r)^n$ where $A$ is the amount, $P$ is the principal, $r$ is the rate, and $n$ is the number of years.<br />2. Calculate the total amount after two years<br /> Substitute $P = 12000$, $r = 0.105$, and $n = 2$ into the formula: $A = 12000(1 + 0.105)^2$.<br />3. Compute the compound interest contribution<br /> Compound interest contribution is $A - P$. Calculate $A$ and subtract $P$.
Click to rate:

Similar Questions