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27 votes
Find the compound interest principal 1750 interest rate 2 percent time 20 years

User Levand
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1 Answer

30 votes
30 votes

To find the compound interest over a certain period of time we need to apply the following expression:


M\text{ = P}\cdot(1+r)^t

Where M is the final value, P is the principal, r is the interest rate divided by 100 and t is the elapsed time in years. Applying the data from the problem gives us:


\begin{gathered} M\text{ = 950}\cdot(1\text{ + }(6.8)/(100))^(10) \\ M\text{ = 950}\cdot(1+0.068)^(10) \\ M\text{ = 950}\cdot(1.068)^(10)\text{ = }1834.1554 \end{gathered}

The interest on over the course of these years were:


\text{interest = 1834.1554 - 1750 = }84.16

User Rodrigolece
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