132k views
3 votes
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.

User Artemus
by
7.7k points

1 Answer

2 votes

We have been given that Nicolas has $6,500 to deposit into an account which earns 3.25% interest compounded annually. We are asked to find amount of interest earned at the end on 8 years.

We will use compound interest formula to solve our given problem.


A=P(1+(r)/(n))^(nt), where,

A = Final amount,

P = Principal amount,

r = Annual interest rate in decimal form,

n = Number of times interest is compounded per year,

t = Time in years.


3.25\%=(3.25)/(100)=0.0325


A=6500(1+(0.0325)/(1))^(1\cdot 8)


A=6500(1+0.0325)^(8)


A=6500(1.0325)^(8)


A=6500(1.2915775352963673)


A=8395.253979

Now we will subtract principal amount from final amount to find amount of interest as:


\text{interest}=8395.253979-6500


\text{interest}=1895.253979\approx 1895.25

Therefore, Nicolas would have earned $1895.25 in interest at the end of 8 years.

User Andrew Nguyen
by
8.3k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories