Principal =P = $18,000
time = T = 10 years
(a) Simple interest
SI = P x R x T
Where:
R = simple interest in decimal form = 5/100= 0.05
SI = 18,000 x 0.05 x 10 = $9,000
Value of investment = 18,000 + 9,000 = $27,000
(b) compounded monthly
A = P (1 + r/n )^nt
Where:
A= future amount
n = number of compounding periods per unit t = 12
A= 18,000 (1 + 0.05/12)^12*10
A= $29,646.17
