Question

An employee put $5,000 in a retirement account that offers 9% interest compounded annually. The employee makes no additional deposits or withdrawals. How much interest will the employee have earned at the end of 5 years. Make sure to round your answer to the hundredths.

Answer 1

Answer:

$2,693.12 will the employee have eared at the end of 5 years.

Step-by-step explanation:

The formula of compound interest:

$A=P(1+r)^n$

$I$ = A-P

A= The amount in the account after n years

P= Principal

r= rate of interest annually

n= time in years.

An employee put $5,000 in retirement account that offer 9% interest compounded annually.

Here P=$5,000, r=9%=0.09, n= 5 years

$A=5,000(1+0.09)^5$

   =$7,693.12

The interest = A-P

                   =$(7,693.12-5,000)

                   =$2,693.12

$2,693.12 will the employee have eared at the end of 5 years.