Question

On January 1, Alan King decided to deposit $ 58,800 in a savings account that will provide funds four years later to send his son to college. The savings account will earn 8% annually. Any interest earned will be added to the fund at year-end (rather than withdrawn).
(show computations and round to the nearest dollar):
(c) What is the total interest for the four years?

Answer 1

The amount 'a' available after 'n' years of a sum 'p' saved now at a rate of interest 'r' is

 a= p(1+r)^n

For our case a = 58,800 (1+0.08)^4 = 58,800 x 1.36 = 79,997.

2.

The journal entry to be made on January 1 is

Date Account                                 Debit                                 Credit

Jan.1 Deposit  account               58,800  

 Cash                                                                                  58,800

 (To record deposit made in a savings account)    

3. Total interest for four years   = Amount available after four years - Initial deposit = $79,997 - $58,800 = $21,297

Interest is the financial charge for the privilege of borrowing money, usually expressed as an annual percentage rate (APR). Interest is the amount of money a lender or financial institution receives for lending out money.

An Interest rate tells you how high the cost of borrowing is, or excessive the rewards are for saving. So, if you're a borrower, the interest rate is the amount you're charged for borrowing money, shown as a percentage of the total amount of the loan.  

learn more about interest rates here brainly.com/question/25793394

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