Question

Applying the Compound Interest Formula

What is the total amount after 2 years?
An initial amount of $600 is invested in a compound
savings account with an annual interest rate of 3.5%.
1. Define variables
2. Substitute into formula
A = P(1+r)
3. Evaluate
What is the total amount after 4 years?
Intro​

Answer 1

The amount is $8358.7 and the interest is $3858.7.

Explanation:

STEP 1: To find amount we use formula:

A=P(1+rn)n⋅t

A = total amount

P = principal or amount of money deposited,

r = annual interest rate

n = number of times compounded per year

t = time in years

In this example we have

P=$4500 , r=7% , n=2 and t=9 years

After plugging the given information we have

A=4500(1+0.072)2⋅9A=4500⋅1.03518A=4500⋅1.857489A=8358.7

STEP 2: To find interest we use formula A=P+I, since A=8358.7 and P = 4500 we have: