Question

Noal deposited $2300 into a savings account for which interest is compounded weekly at a rate of 2.12%. How much interest will he earn after 7 years?

Answer 1

$ 367.87

Explanation:

The formula for Compound interest =

A = P(1 + r/n)^nt

Where

A = Amount after t years

P = Initial Amount Invested = $2,300

t = time in years = 7 years

n = Compounding frequency = weekly = 52 times

r = interest rate = 2.12% = 0.0212

Hence:

A = $2,300(1 + 0.0212/52) ^52× 7

A = $ 2,667.87

Interest calculated as:

Amount - Principal

I = $2,667.87 - $2,300.00

I (interest) = $ 367.87