Question

If $20,000 is deposited in an account that pays 6% interest compounded annually, how much interest is earned at the end of 20 years? A $24.000 B $64.142.71 C $44.142.71 D $56.142.71

Answer 1

Given data:

The given principal is P=$20,000.

The given rate of interest is r=6%.

The given time is t=20 years.

The expression for the interest is,

`I=P(1+(r)/(100))^t-P`

Substitute the given values in the above expression.

`\begin{gathered} I=20,000(1+(6)/(100))^(20)-20,000 \\ =20,000(1.06)^(20)-20,000 \\ =44,142.71 \end{gathered}`

Thus, the interest earned after 20 years is $44,142.71, so (C) option is correct.