Question

Find how much interest $10,000 earns in 2 years in a certificate of deposit paying 8.5% interest compounded quarterly

Answer 1

Answer:

Interest earned in two years is approximately $1,837

Step-by-step explanation:

A= P( 1+r/n)^nt

Where,

A= principal + interest

P= principal= $10,000

r= interest rate = 8.5%

t= Time = 2years

n = periods = 4

A= P( 1+r/n)^nt

= 10,000(1+0.085/4)^4*2

= 10,000( 1 + 0.0213)^8

= 10,000(1.0213)^8

= 10,000(1.1837)

=11,837

A= $11,837

The interest earned in two years is

A = p + I

A - P = I

$11,837 - $10,000 = I

$1,837 = I

I= $1,837

Interest earned in two years is approximately $1,837