Question

5 Lian put $3,500 into an investment

account that pays 2% interest compounded
annually. If she makes no additional
deposits or withdrawals, which amount is
closest to the total interest Lian will earn on
this investment at the end of 5 years?

Answer 1

`~~~~~~ \textit{Compound Interest Earned Amount} \\\\ A=P\left(1+(r)/(n)\right)^(nt) \quad \begin{cases} A=\textit{accumulated amount}\\ P=\textit{original amount deposited}\dotfill &\$3500\\ r=rate\to 2\%\to (2)/(100)\dotfill &0.02\\ n= \begin{array}{llll} \textit{times it compounds per year}\\ \textit{annually, thus once} \end{array}\dotfill &1\\ t=years\dotfill &5 \end{cases}`

`A=3500\left(1+(0.02)/(1)\right)^(1\cdot 5)\implies A\approx 3864.28~\hfill \underset{earned~interest}{\stackrel{3864.28~~ - ~~3500}{\approx 364.28}}`