*Keywords:
Expression, Compound interest, down payment, time.
The expression that is used to calculate payments with compound interest has the following elements: An initial payment P0, a compound interest rate r, a period of time t and an income I. The formula has the following form:
[tex]I = P_0 (1 + r) ^ t[/tex]
In this case we have an interest rate r = 0.08, t = 8 years, initial fee P0 = 850
So:
[tex]I = 850 (1 + 0.08) ^ 8[/tex]
I = $ 1573.29
Then, the amount obtained by interest is:
$ 1573.29 - $ 850 = $ 723.29
Answer:
Total amount = $ 1573.29
Amount of interest = $723.29