The principal represents an amount of money deposited in a savings account subject to compound interest at the given rate. Answer parts (a) and (b).

Principal & Rate & Compounded & Time
$5500 & 3.5% & monthly & 4 years

Click the icon to view some finance formulas.
a. Find how much money there will be in the account after the given number of years.

The amount of money in the account after 4 years is $6325.22.
(Round to the nearest hundredth as needed.)
b. Find the interest earned.

The amount of interest earned is $ [ ]
(Round to the nearest hundredth as needed.)

Question

The principal represents an amount of money deposited in a savings account subject to compound interest at the given rate. Answer parts (a) and (b).

Principal &amp; Rate &amp; Compounded &amp; Time 
$5500 &amp; 3.5% &amp; monthly &amp; 4 years

Click the icon to view some finance formulas. 
a. Find how much money there will be in the account after the given number of years. 
 
The amount of money in the account after 4 years is $6325.22. 
(Round to the nearest hundredth as needed.) 
b. Find the interest earned. 
 
The amount of interest earned is $ [ ] 
(Round to the nearest hundredth as needed.)

GinnyAnswer · Answer

Calculate the interest earned by subtracting the principal from the final amount. 
 The amount after 4 years is $6325.22 and the principal is $5500 . 
 Perform the subtraction: $6325.22 − $5500 = $825.22 . 
 The interest earned is $825.22 ​ . 
 
 Explanation 
 
 Understanding the Problem We are given the principal amount, the interest rate, the compounding period, and the time. We are also given the amount of money in the account after 4 years, which is $6325.22. We need to find the interest earned. 
 
 Finding the Interest Earned To find the interest earned, we subtract the principal amount from the amount after 4 years. The principal amount is $5500, and the amount after 4 years is 6325.22. S o , t h e in t eres t e a r n e d i s : I n t eres t = A m o u n t − P r in c i p a l $ 
 
 Calculating the Interest Now, we perform the subtraction: Interest = $6325.22 - $5500 
 Interest = $825.22 
 
 Final Answer Therefore, the amount of interest earned is $825.22.

Examples 
 Understanding compound interest is crucial for making informed financial decisions. For example, if you invest $5,500 in a savings account with a 3.5% annual interest rate compounded monthly, you can calculate how much interest you'll earn over 4 years. This knowledge helps you compare different investment options and plan for your financial goals, such as saving for a down payment on a house or retirement. By understanding the power of compound interest, you can make your money work for you and achieve your long-term financial objectives.

Answer (1)

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