Find the compound interest earned by the deposit. Round to the nearest cent.
-$2000 at 1% compounded semiannually for 8 years

Question

Quizplus · Accepted Answer

The compound interest can be calculated using the formula A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount ($2000), r is the annual interest rate (1% or 0.01), n is the number of times that interest is compounded per year (2 for semiannually), and t is the time the money is invested for (8 years). Plugging in the values: A = 2000(1 + 0.01/2)^(2*8) = 2000(1 + 0.005)^(16) ≈ $2166.14. The interest earned is the final amount minus the principal: $2166.14 - $2000 = $166.14.

Find the Compound Interest Earned by the Deposit