Question

Using the formula in model 1, choose the correct answers for the total amount and amount of interest earned in the following compound interest problem. $500 at 4% for 5 years, compounded annually. Total Amount = $ Interest Amount =$

Answer 1

608.33

108.33

Explanation:

Found answer in above answer.

Answer 2

The formula to find the total amount is
A=p (1+r)^t
A total amount?
P present value 500
R interest rate 0.04
T time 5years
A=500×(1+0.04)^(5)=608.33

To find the interest amount just subtract the amount of the present value from the total amount
interest amount
608.33−500=108.33