Question
How much interest does a $541 investment earn at 4% compounded annually over four years?
Answers
GPT 3.5
The formula for compound interest is A = P(1 + r/n)^(nt) where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (initial deposit or loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested/borrowed for
Given:
P = $541
r = 4% or 0.04
n = 1 (compounded annually)
t = 4 years
Plugging in the values:
A = $541(1 + 0.04/1)^(1*4)
A = $541(1.04)^4
A = $541(1.16985842)
A = $633.10
The interest earned would be $633.10 - $541 = $92.10. Therefore, a $541 investment at 4% compounded annually over four years would earn $92.10 in interest.
A = the future value of the investment/loan, including interest
P = the principal investment amount (initial deposit or loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested/borrowed for
Given:
P = $541
r = 4% or 0.04
n = 1 (compounded annually)
t = 4 years
Plugging in the values:
A = $541(1 + 0.04/1)^(1*4)
A = $541(1.04)^4
A = $541(1.16985842)
A = $633.10
The interest earned would be $633.10 - $541 = $92.10. Therefore, a $541 investment at 4% compounded annually over four years would earn $92.10 in interest.