Question

Calc how much interest you would earn on a deposit of $8500 at 2.75%,

compounded annually, for a term of 4 years?

Answer 1

9514 1404 393

Answer:

$974.28

Explanation:

The formula for the account balance is ...

A = P(1 +r)^t

Subtracting the principal gives the amount of interest.

I = P((1 +r)^t -1)

i = $8500(1.0275^4 -1) ≈ $974.28

You would earn $974.28 in interest over that time period.