Question

Determine the compound interest earned on $200 invested at 3.25% compound annually for 6 years

Answer 1

$882.24 compound interest earned / $1,082.24 total

Explanation:

You are going to want to use the compound interest formula, which is shown below.

`P(1+(r)/(n) )^(nt)`

P = initial balance

r = interest rate

n = number of times compounded annually

t = time

Now lets plug in the values into the equation.

`200(1+(.325)/(1) )^(6)` = 1,082.24

Since we want to know the compound interest earned, just subtract 200 from 1,082.24.

1,082.24 - 200 = $882.24