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Priscilla opens a savings account with a deposit of $8,100. Priscilla’s account pays 5% interest compounded annually. If Priscilla makes no deposits or withdrawals over the next 4 years, how much money will she earn in interest?

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To solve the problem, we can use the formula for compound interest:

A = P(1 + r/n)^(n*t)

where A is the final amount, P is the principal (initial deposit), r is the interest rate (as a decimal), n is the number of times interest is compounded per year, and t is the time (in years).

In this case, P = $8,100, r = 0.05, n = 1 (compounded annually), and t = 4. Plugging these values into the formula, we get:

A = $8,100(1 + 0.05/1)^(1*4)

A = $8,100(1.05)^4

A = $10,563.23

Therefore, Priscilla will earn $10,563.23 - $8,100 = $2,463.23 in interest over the next 4 years.

User Dan Rowlands
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