Question

Lucy deposited $1,000 into an account that earns 2.5% compound interest, compounded yearly. How much interest will Lucy earn after 8 years?

my answer is $1218.40 but supposedly it's wrong.

Answer 1

the balance in the account after 20 years is $819

Explanation:

The computation of the balance in the account after 20 years is shown below:

As we know that

Future value = Present value × (1 + rate of interest)^number of years

= $500 × (1 + 2.5%)^20

= $500 × 1.025^20

= $819

Hence, the balance in the account after 20 years is $819