Question

Find how much interest $10,000 earns in 2 years in a certificate of deposit paying 5.5% interest compounded quarterly.

The interest earned in 2 years is $__.
(Do not round until the final answer. Then round to the nearest cent as needed.)
Can anyone help me with this?? 100 points

Answer 1

Apply compound interest formula

Amount

• P(1+r/n)^nt
• 10000(1+0.055/4)^4(2)
• 11154.42

Interest

• 11154.42-10000
• 1154.42

Answer 2

• $1154.42

Explanation:

Given:

• Deposit amount P = $10000
• Interest rate r = 5.5% or 0.055
• Time t = 2 years
• Number of compounds n = 4

The interest is:

• P*(1 + r/n)^(nt) - P =
• 10000(1 + 0.055/4)^8 - 10000 =
• 11154.42 - 10000 =
• 1154.42