Question

Keith is calculating the interest earned on a deposit of $2000 in an account that earns 4.2% annual compound interest after 4 years. How much did Keith earn in interest?

Answer 1

Answer: $357.77

Explanation:

Answer 2

$357.77

Explanation:

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

`A=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:

`A=2,000(1+(0.042)/(1))^4`

`A=2,357.77`

To find the interest earned, subtract 2,000 from 2,357.77

`2,357.77-2,000=357.77`

Keith earned $357.77 in interest.