Question

Brian deposited $2,419 into a savings account for which interest is compoundedquarterly at a rate of 2.54%. How much interest will he earn after 7 years? Roundanswer to the hundredths place. If answer does not have a hundredths place theninclude zeros so it does. Do not include units in the answer.

Answer 1

Given

Principal = $2419

rate = 2.54%

time = 7 years

compounds quarterly

$\begin{gathered} A=P(1+\frac{r}{n})^{nt} \\ A=2419(1+\frac{0.0254}{4})^{4(7)} \\ A=2419(1.00635)^{28} \\ A=2888.08 \end{gathered}$

After 7 years, the amount deposit is now $2888.08, subtract by the principal amount to get the interest.

$\begin{gathered} I=A-P \\ I=2888.08-2419 \\ I=469.08 \end{gathered}$

Therefore, the interest that he will earn after 7 years us $469.08.