Question

If $300 is invested at a 4% APR, how much interest will be earned in 10 years compounded annually?

(Round to the nearest cent and do not enter the dollar sign)

Answer 1

Formuala for calculation compounding interest is

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

A = Final Amount

P = Initial Principal Amount

r = Interest Rate.

n = Number of times interest applied per time period

t = Number of time period elapsed

Future Value = 300(1+0.04)¹⁰ = $444.0733

Interest Amount = 444-300 = 144