Sumi Kato's savings account has a balance of $\$ 715$. After 21 years, what will the amount of interest be at $4.5 \%$ compounded annually?
A) $\$ 1075.97$
B) $\$ 1092.97$
C) $\$ 1086.97$
D) $\$ 1501.50$

Question

Quizplus · Accepted Answer

The amount of interest earned can be calculated using the compound interest formula: $A = P(1 + r)^n$, where $A$ is the amount of money accumulated after n years, including interest, $P$ is the principal amount (\$715), $r$ is the annual interest rate (4.5%, or 0.045 when expressed as a decimal), and $n$ is the time the money is invested for in years (21 years). First, calculate the future value: $A = 715(1 + 0.045)^{21}$. This gives $A ≈ \$1801.97$. The interest earned is the future value minus the principal: $1801.97 - 715 = \$1086.97$.

Sumi Kato's Savings Account Has a Balance Of $715\$ 715$715 After 21 Years, What Will the Amount of Interest

Sumi Kato's Savings Account Has a Balance Of $\$ 715$ After 21 Years, What Will the Amount of Interest