Question

Donna deposits $850 in an account that earns 2.9% compounded annually. Find the amount of interest earned and total value of the account after 60 months

Answer 1

$130.61

Explanation:

Interest = 2.9% (Compounded interest)

P= $850, t = 60 month = 60/12 = 5 years

Interest earned = P(1+r/100)^n - P

Interest earned = 850 * [(1+2.9/100)^5} - 850

Interest earned = 850 *(1.029)^5 - 850

Interest earned = 850 * 1.1536575 - 850

Interest earned = 980.6088 - 850

Interest earned = $130.6088

Interest earned = $130.61