Question

How much compound interest will $50,000 earn in 10 years at 3.4% APR compounded yearly, providing no deposits or withdrawals are made? Hint: Use the formula A = P(1.00 + r)n.

Answer 1

Total = Principal * (1 + rate)^years
Total = 50,000 * (1.034)^10
Total = 50,000 * 1.3970288911
Total = 69,851.44

Answer 2

Compound interest made on $50,000 for 10 years at 3.4% APR compounded yearly is $ 19851.44

Explanation:

Given: Principal $50,000 for 10 years at 3.4% APR compounded yearly,

We have to find the compound interest made on $50,000 for 10 years at 3.4% APR compounded yearly,

Using formula for compound interest

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

Where A is amount

P is principal

r is rate of interest

n is time period

For the given question,

P = $ 50,000

r = 3.4% = 0.034

t = 10

Substitute, we have,

`A=50000(1+0.034)^(10)`

Simplify, we get,

A = $ 69851.44

Thus, Compound interest = Amount - Principal

C.I = 69851.44 - 50,000

C.I. = 19851.44

Thus, Compound interest made on $50,000 for 10 years at 3.4% APR compounded yearly is $ 19851.44