Question

Please help!

Quincy has $6,000 in a savings account that earns 4% interest, compounded annually.

To the nearest cent, how much interest will he earn in 5 years?

Use the formula B = p(1 + r)t, where B is the balance (final amount), p is the principal (starting amount), r is the interest rate expressed as a decimal, and t is the time in years.

Answer 1

Given Information:

Principle amount = P = $6,000

Interest rate = r = 4% = 0.04

Period in years = t = 5

Required Information:

How much interest will he earn in 5 years = ?

Answer:

Amount of interest = $1,299.92

Explanation:

Using the formula given in the question,

`B = P(1 + r )^(t)`

Where B is the final amount, P is the initial amount, r is the interest rate and t is the number of years

`B = P(1 + r )^(t)\\\\B = 6,000(1 + 0.04)^(5)\\\\B = 7,299.92`

The amount of interest earned is

`Amount \:of\: interest = B - P \\\\Amount \:of \:interest = 7,299.92 - 6,000\\\\Amount \:of \:interest = 1,299.92`

Therefore, Quincy has earned $1,299.92 in terms of interest by investing $6,000 in a savings account at the rate of 4% annual interest for a period of 5 years.