Question

Glenn invested $22,000 at 7% interest compounded annually. How much interest will Glenn earn in 3 years?

$19,826.24

$20,837.25

$2340.23

$4950.95

Answer 1

Given:
P = $22,000, the principal
r = 7% =0.07, the rate
n = 1, annual compounding
t = 3 years

The value after 3 years is

`A=P(1+ (r)/(n) )^(nt)`
That is,
A = 22000(1.07)³ = $26,950.95
Interest earned = $26,950.95 - $22,000 = $4,950.95

Answer: $4,950.95