Question

Tiana invests $83,927 in a start-up company. She will be repaid at the end of 7 years at 7% interest compounded annually. Find the amount of interest she willearn on this investment.DO NOT ROUND ANY NUMBERS UNTIL YOUR FINAL ANSWER!Round to the nearest dollar.

Answer 1

For a initial amount invested P at a annual interest rate r, the total amount after n years is given by:

`A=P\cdot(1+r)^n`

For P = $83927, r = 0.07 and n = 7, we have:

`\begin{gathered} A=83927\cdot1.07^7 \\ A=\text{ \$134768.422} \end{gathered}`

Then, the amount of interest Tiana will earn on this investment is given by:

`A-P=134768.422-83927=\text{ \$50841}`