Question

Alexis deposited $6,000 into an account that pays 3% interest compounded annually. He doesn’t withdraw or deposit any money for 4 years. How much interest did he earn in that time?

Answer 1

$720

Explanation:

The formula is:

A = P(1 + rt)

We know

P = $6000

r = 3% = 0.03

t = 4 years

A = 6000( 1 + 0.03 x 4) = $6720

Now we have to find the interest by taking

$6720 - $6000 = $720

So, he earns $720 in interest in 4 years.