Question

You have$560 in an account which pays 4.8% compounded annually. If you invest your money for 8 years, then how many dollars of interest will you earn by the end of term

Answer 1

Answer:

$ 254.85

Step-by-step explanation:

Total amount invested = $ 560

Interest rate = r = 4.8% = 0.048

Time in years = t = 8 years

The formula for compound interest is:

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

Here,

A is the total amount accumulated after t years. P is the amount invested initially and n is the compounding periods per year. Since in this case compounding is done annually, n will be 1. Using the values in the above formula, we get:

$A=560(1+\frac{0.048}{1})^{8} = \ 814.85$

Thus, the total amount accumulated after 8 years will be $ 814.85

The amount of interest earned will be:

Interest = Amount Accumulated - Principal Amount

Interest = $ 814.85 - $ 560 = $ 254.85

By the end of 8 years, $ 254.85 would be earned in interest.