To solve for the amount + interest for compounding interest you will use this formula:
Where A = Accrued amount P = Principal amount r = rate in decimal t = number of years n = compounding periods per unit of time Your given: P = $2050 r = 4% or 0.04 t = 3 years n = 1 per yr Now we insert that into your formula:
Now to get the interest just remember that: I = A - P I = $2,305.97 - $2,050 I = $255.97 So that is equal to 255 dollars and 97 cents