Given:
The initial investment is, P = $720.
The rate of interest is, r = 7.8% = 0.078.
The number of years of investment is, t = 6 years.
Explanation:
The general formula to find the compound interest is,
[tex]A=P(1+\frac{r}{n})^{nt}[/tex]Here, n represents the number of times compounded in a year. It is given that the amount is compounded monthly, so the value of n = 12.
To find total amount after 6 years:
Now, substitute the given values in the general equation.
[tex]\begin{gathered} A=720(1+\frac{0.078}{12})^{12(6)} \\ =720(1+0.0065)^{72} \\ =1147.95 \end{gathered}[/tex]Thus, the total amount earned is $1147.95.
To fnd interest amount:
Now, the amount of interest can be calculated as,
[tex]\begin{gathered} I=A-P \\ =1147.95-720 \\ =427.95 \end{gathered}[/tex]Hence, the interest amount earned is $427.95 and the total amount earned is $1147.95.
