Can someone will give me a formula?
November 20, 2006 1:44pm CST
George puts $5,400 in a savings account at an annual interest rate of 6.5%. Approximately how much interest will the principal earn in 2 years? The answer is $725 but do you come up with the result.
• United States
15 Dec 06
Does the problem say anything about compounding the interest? That will make a difference in the answer. If you compound annually, then you will get $724.82...which is very close to the $725. A = 5400(1 + 0.65)^(2) The formula is A = P(1 + r/n)^(nt) P is the amount of deposit r is the interest rate as a percent n is the number of compounding periods in one year t is the time in years.