Answer:
This question is based on the simple and compound interest topic.
In this question, we simply use a formula to find compound interest (the interest over the interest).
A = P( 1+r/100 )^t
here,
P = principal amount
r = rate of interest
t = time
A = Final amount.
In the question, we have given values
Principal amount = $400
rate of interest = 5% annually
time is given= 2years
we need to find a final amount A
we simply put the value in the formula
A = 400 (1+5/100)^2
A= 400(1+1/20)^2
A = 400(21/20)^2
A =400*(21/20)*(21/20)
A = 400*1.05*1.05
A = 441$
the final amount is 441$