Question

How much interest is earned on 20,000 at 6% for 2 yrs compounded annually?

Answer 1

P = Po(1+r)^n.

r = 0.06 = APR expressed as a decimal.

n = 1comp/r * 2yrs = 2 Compounding periods.

P = 20000(1.06)^2 = $22472.00.