Question

How much interest would you earn on an investment of $600 for 8 years at 10% interest?

Answer 1

In order to calculate the interest generated, we can use the following formula:

`I+P_0=P_0(1+i)^t`

Where I is the interest earned after t years, P0 is the initial value and i is the interest rate.

So, using P0 = 600, i = 0.10 and t = 8, we have:

`\begin{gathered} I+600=600(1+0.1)^8 \\ I+600=600\cdot1.1^8 \\ I+600=1286.15 \\ I=1286.15-600 \\ I=686.15 \end{gathered}`

So the interest earned is $686.15