Question

For the investment with interest compounded annually, find the final balance and the total interest earned.



$500 for 2 years at 8%



A.


final balance: $540
interest earned: $40


B.


final balance: $580
interest earned: $80


C.


final balance: $583.20
interest earned: $83.20


D.


final balance: $620
interest earned: $120

Answer 1

\[A=P\left(1+\frac{r}{n}\right)^{nt}\]
P is the initial amount,
r is the rate of interest,
n is the number of times compounded in a year, and
t is time (in years).