Question

$850 at 7% compounded annually for 3 years how do you calculate earned interest?

Answer 1

$191.29

Explanation:

Use the formula

`A = P(1 + (r)/(100))^n`

where P is amount deposited, A the accrued amount, n number of years and r the interest rate in % compounded annually

The division by 100 is necessary to convert r% to a decimal for calculations

We have P = 850, r = 7% and n = 3

Plugging these in we get

`A = 850\cdot (1 + ((7)/(100))^3\\\\A= 850\cdot(1 + 0.07)^3\\A = 850\cdot1.07^3\\\A = \$1,041.29`

Interest = A - P = 1041.29 - 850 = $191.29