Question

Consider a $2,900 deposit earning 8 percent interest per year for five years. What is the future value? (Do not round intermediate calculations. Round your answer to 2 decimal places.) How much total interest is earned on the original deposit?

Answer 1

Answer:

future value = $4,261.05

total interest is earned =  $1,361.05

Explanation:

given data

deposit = $2900

interest rate = 8 % = 0.08

time = 5 year

solution

we get here first future value that is express as

future value = present value × $(1+r)^{t}$    .............................1

put here value and we get

future value = $2900 × $(1+0.08)^{5}$

solve it we get

future value = $4,261.05

and

total interest is earned on the original deposit will be here

total interest is earned = $4261.05 - $2900

total interest is earned =  $1,361.05