Question

Chelsea invested $15,000 at 4% interest compounded annually.



How much interest will she earn in 4 years?



A.
$2400.00


B.
$2547.88


C.
$17,400


D.
$17,547.88

Answer 1

The formula to find compound interest is:
\[A=P(1+\frac{r}{n})^{nt}\]P is the Principal
r is the rate of interest in decimal form
n is the number of times it is compounded in a year
t is the time that passes by

Now you just need to plug in the numbers and solve.

\[A=15000(1+\frac{.04}{1})^{(1)(4)}\]\[A=15000(1.04)^4\]
This ends up to be about $17,547.88, so the answer is D.

Answer 2

It's actually B I took the test.