Question

Find the interest earned given the following:Amount needed: $12,300 Time in years: 4Interest: 6%Compounded: Annually

Answer 1

$A\text{ = }P(1+r)^t$

Replacing the information given on the formula:

$12300=P(1+0.06)^4$

Solving for P:

$P\text{ = }\frac{12300}{1.06^4}=9742.75$

Interest earned: 12300 - 9742.75 = 2557.25