Question

Chelsea invested $15,000 at 4% interest compounded annually. How much interest will she earn in 4 years?

Answer 1

P = 15000, r = 4% = 0.04 per year, n = 4 years.

A = P(1 + r)ⁿ

A = 15000(1 + 0.04)⁴

A ≈ 15000(1.04)⁴ ≈ 17547.88

Interest = Amount - Principal = 17547.88 - 15000 =2547.88

Interest ≈ $ 2547.88

Answer 2

The future worth (F) of the money invested now (P) with the compounded interest (i) is calculated by the equation,
F = P x (1 + i)^n
where n is the number of years. Substituting the known values,
F = ($15,000) x (1 + 0.04)^4
The value of F is $17,547.88.