Question

Keith is calculating the interest earned on a deposit of $2000 in an account that earns 4.2% annual compound interest after 4 years. How much did Keith earn in interest?

Answer 1

Answer:

$357.77

Step-by-step explanation:

You are going to want to use the compound interest formula, which is shown below.

$A=P(1+\frac{r}{n} )^{nt}$

P = initial balance

r = interest rate

n = number of times compounded annually

t = time

Now lets plug in the values into the equation:

$A=2,000(1+\frac{0.042}{1})^4$

$A=2,357.77$

To find the interest earned, subtract 2,000 from 2,357.77

$2,357.77-2,000=357.77$

Keith earned $357.77 in interest.