Question

$2500 in saving account earning 3..5 percent interest what was the total interest earned after 6 years

Answer 1

The total interest earned after 6 years is $ 573.14

Solution:

The formula for compound interest is given as:

$compound\ Interest =P(1+r)^{t}-P$

Where,

P is the principal amount

r is the rate of interest in decimal

t is the number of years

In given question,

p = 2500

r = 3.5 % = $\frac{3.5}{100} = 0.035$

t = 6 years

Substituting the values in formula we get,

$compound\ Interest =2500(1+0.035)^{6}-2500\\\\compound\ Interest = 2500(1.035)^6-2500\\\\compound\ Interest = 2500((1.035)^6-1)\\\\compound\ Interest = 2500 (1.229 - 1) = 2500 \times 0.229 = 573.14$

Thus the total interest earned after 6 years is $ 573.14