Kelsey deposited $3,600 in a bank account with an annual interest rate of 4.25%. How much interest was earned in 5 years?
Ah, the magical world of finance! Let's calculate the interest Kelsey earned. With a deposit of $3,600 and an annual interest rate of 4.25%, Kelsey would earn interest of:
3600 * 0.0425 = $153
But we need to account for 5 years, so let's multiply the interest earned by the number of years:
153 * 5 = $<<153*5=765>>765
So, Kelsey earned $765 in interest. That's like finding free money, but without the hassle of digging up your backyard!
To calculate the interest earned over 5 years, we need to use the formula:
Interest = Principal × Rate × Time
In this case:
Principal = $3,600
Rate = 4.25% (0.0425 as a decimal)
Time = 5 years
Plugging in the values, we get:
Interest = $3,600 × 0.0425 × 5
Calculating this gives us:
Interest = $765
Therefore, the amount of interest earned in 5 years is $765.
To calculate the amount of interest earned, we need to use the formula:
Interest = Principal x Rate x Time
Where:
- Principal is the initial amount deposited: $3,600
- Rate is the annual interest rate: 4.25% or 0.0425 (in decimal form)
- Time is the number of years: 5
Now, let's substitute the given values into the formula:
Interest = $3,600 x 0.0425 x 5
Multiplying these values:
Interest = $765
Therefore, Kelsey earned $765 in interest over 5 years.
so you use the formula:
A = P(1 + r/n)nt
Where:
A = Accrued Amount (principal + interest)
P = Principal Amount
I = Interest Amount
R = Annual Nominal Interest Rate in percent
r = Annual Nominal Interest Rate as a decimal
r = R/100
t = Time Involved in years, 0.5 years is calculated as 6 months, etc.
n = number of compounding periods per unit t; at the END of each period
and you will get:
A = $ 4,432.85
A = P + I where
P (principal) = $ 3,600.00
I (interest) = $ 832.85