Question

You want to recieve $475 at the end of each year for 4 years. interest is 8.9% compounded annually. how much of what you receive will be interest?

Answer 1

To calculate the amount of principal and interest received, you can use the formula for compound interest. By plugging in the given values, the principal amount is approximately $342.55, and the interest received is approximately $132.45.

Step-by-step explanation:

To calculate the amount of interest received, we can use the formula for compound interest:

A = P(1 + r/n)^(nt)

where:

• A is the future value of the investment, which is $475
• P is the principal amount that you want to find out
• r is the annual interest rate, which is 8.9% or 0.089
• n is the number of times the interest is compounded per year, which is 1 since it is compounded annually
• t is the number of years, which is 4

Now, we can plug in the values and solve for P:

$475 = P(1 + 0.089/1)^(1*4)

$475 = P(1 + 0.089)^4

$475 = P(1.089)^4

$475 = P(1.3856)

$475/1.3856 = P

P ≈ $342.55

Therefore, the amount of principal that you will receive is approximately $342.55 and the remaining amount of $475 - $342.55 = $132.45 will be the interest received.