Find the compound interest on $650 in 5years at 4% per annum
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To find the compound interest on an amount, you can use the formula:
A = P(1 + r/n)^(nt)
Where:
A = the final amount
P = the principal amount (the initial amount)
r = the annual interest rate (as a decimal)
n = the number of times that interest is compounded per year
t = the number of years
In this case, the principal amount (P) is $650, the annual interest rate (r) is 4% per annum (or 0.04 as a decimal), the number of times interest is compounded per year (n) is not mentioned, and the number of years (t) is 5.
Let's assume that the interest is compounded annually (n = 1). Therefore, the formula becomes:
A = 650(1 + 0.04/1)^(1*5)
= 650(1 + 0.04)^5
= 650(1.04)^5
≈ 650(1.2166529024)
≈ 790.8485866
The final amount (A) is approximately $790.85.
To find the compound interest, subtract the principal amount from the final amount:
Compound Interest = A - P
= 790.85 - 650
≈ $140.85
Therefore, the compound interest on $650 in 5 years at 4% per annum (compounded annually) is approximately $140.85.