Consider a $2,700 deposit earning 6 percent interest per year for 9 years. How much total interest is earned on the original dep

Question

3 years ago

15

osit (excluding interest earned on interest)?

1 answer:

kaheart [24] · Answer 1 · 2022-02-01T17:50:48+03:00

Answer:

Total interest earned on the original deposit=$403.593

Explanation:

Total Interest earned after 6 years using compound Interest:

$FV=PV(1+i)^n$

Where:

PV is the deposit amount

i is the interest Rate

$FV=\$2,700(1+0.06)^9$

FV=$4561.593

Total Interest earned after 6 years=FV-PV

Total Interest earned after 6 years=$4561.593-$2,700

Total Interest earned after 6 years=$1861.593

Total Interest earned after 6 years using single Interest:

Total Interest=$2,700*0.06*9

Total Interest =$1458

Total interest earned on the original deposit=Total Interest earned after 6 years-Total Interest

Total interest earned on the original deposit=$1861.593-$1458

Total interest earned on the original deposit=$403.593