Question

$1,000 at 14% for 2 yearswhat is the total amount? what is the compinded interest?

Answer 1

ANSWER

$\begin{gathered} \text{Amount}=\text{ \ 1299.60} \\ \text{Interest= \ 299.60} \end{gathered}$

EXPLANATION

We want to find the total amount after 2 years.

To do this, we apply the formula for compound amount:

$A=P(1+R)^t$

where P = principal

R = rate

t = amount of time

To do this, we have from the question that:

P = $1,000

R = 14%

T = 2 years

Therefore, the compound amount is:

$\begin{gathered} A=1000(1+\frac{14}{100})^2 \\ A=1000(1+0.14)^2=1000(1.14)^2 \\ A=1000\cdot1.2996 \\ A=\text{ \ 1299.60} \end{gathered}$

To find the compount interest, subtract the principal from the compound amount:

$\begin{gathered} I=1299.60-1000 \\ I=\text{ \ }299.60 \end{gathered}$