Answer:
Find out the how much interest is earned on the investment .
To prove
Formula
\(Amount =P ( 1 +\frac{r}{12})^{12t}\)
Where P is the principle, r is rate in decimal form , t is the time.
As given
An investment of $6,599.20 earns 4.2% interest compounded monthly over 7 years.
4.2% is written in the decimal form
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= 0.042
P = $6,599.20
T = 7 years
Put in the formula
\(Amount = 6599.20( 1 +\frac{0.042}{12})^{12\times 7}\)
\(Amount = 6599.20( 1 +\frac{0.042}{12})^{84}\)
\(Amount = 6599.20( 1 + 0.0035)^{84}\)
\(Amount = 6599.20( 1.0035)^{84}\)
\(Amount = 6599.20\times 1.3411\)
Amount = $ 8850.187
Interest = Amount - Principle
= $ 8850.187 - $6,599.20
= $2250.987
Therefore the interest is $2250.987
Option (a) is correct.
