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

B

Answer 2

may i ask how?

Answer 3

It has an 8% interest so you multiply 500 x .08 =40 so its 40 for 1 year x 2 = 80

Answer 4

Answer is not B.
The interest rate is 8%, so after 1 year, multiply the principal by 1.08.
Then take the new amount, and multiply by 1.08 again to find the amount at the end of the second year.

Answer 5

C?

Answer 6

@MathewR. That is simple interest. The problem here states compound interest, so you earn interest on the interest.

Answer 7

500 * 1.08 * 1.08 = 583.20

Answer 8

C is correct.

Answer 9

ahh i didn't read the compound part... My bad i apologize!

Answer 10

its cool

Answer 11

Start: $500
After 1 year: $500 * 1.08 = $540

Now start at the end of 1 year: $540
After the second year: $540 * 1.08 = $583.20