Question

Nicolas has $6,500 to deposit into an account which earns 3.25% interest compounded annually. How interest will he have earned at the end of 8 years.

Answer 1

The interest earned at the end of 8 years is $1895.25

Explanation:

Applying the compound interest formula we have A = P(1+r)^t

A, final amount =?

P initial principal balance= $6,500

r, interest rate =3.25%

t, number of time periods =8 years

Substituting our given data we

A= 6500(1+3.25/100)^8

A=6500(1+0.0325)^8

A=6500(1.0325)^8

A=6500*1.2915775353

A=8395.25

Interest = final amount - principal

Interest =8395.25-6500

Interest = $1895.25