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

\(\bf A=P\left(1+\frac{r}{n}\right)^{nt}
\\ \quad \\
A=\textit{current amount}\\
P=\textit{original amount deposited}\to \$500\\
r=rate\to 8\%\to \frac{8}{100}\to 0.08\\
n=\textit{times it compounds per year, annually means once}\to 1\\
t=years\to 2
\\ \quad \\

A=500\left(1+\frac{0.08}{1}\right)^{1\cdot 2}\qquad \textit{final balance}\to P+A\)

Answer 2

thanks

Answer 3

yw