Question

Whitney opened a savings account 25 years ago with a deposit of $4,280.83. The account has an interest rate of 5.4% compounded twice a year. How much interest has Whitney earned?

Answer 1

well, the interest rate is stated "per year", and not "per period"

2 periods in a year so the interest rate to use is .054/2

Answer 2

2 periods a year for 25 years comes out to 50 periods entotal

Answer 3

hence:

P(1+r)^t = P + interest

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