Can someone will give me a formula?

@succed (879)
United States
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.
2 responses
EagleEyes
@EagleEyes (646)
• United States
20 Nov 06
I think you take the $5,400 and times it by .065 and times that by 2. I got the answer is $702.00 not $725.00
succed
@succed (879)
• United States
20 Nov 06
That is my answer too but the computer say im wrong?
succed
@succed (879)
• United States
20 Nov 06
I dunno im confused!
bam001
@bam001 (940)
• 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.