Answer
(a) After 20 years, there will be \$49,189.30 in the account.
(b) The interest earned is \$29,189.30
Work Step by Step
(a) We can use this formula:
$A = P~(1+\frac{r}{n})^{nt}$
$A$ is the final amount in the account
$P$ is the principal (the amount of money invested)
$r$ is the interest rate
$n$ is the number of times per year the interest is compounded
$t$ is the number of years
$A = P~(1+\frac{r}{n})^{nt}$
$A = (\$20,000)~(1+\frac{0.045}{360})^{(360)(20)}$
$A = \$49,189.30$
After 20 years, there will be \$49,189.30 in the account.
(b) We can find the interest earned.
$A - P = \$49,189.30 - \$20,000 = \$29,189.30$
The interest earned is \$29,189.30
