Question

Find the interest earned given the following:Amount needed: $12,300 Time in years: 4Interest: 6%Compounded: Annually

Answer 1

`A\text{ = }P(1+r)^t`

Replacing the information given on the formula:

`12300=P(1+0.06)^4`

Solving for P:

`P\text{ = }(12300)/(1.06^4)=9742.75`

Interest earned: 12300 - 9742.75 = 2557.25