Anil invest $3500 in an account that pays a rate of 2.4% per year compound interest. Calculate the total interest at the end of 5 years
To calculate the total interest at the end of 5 years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the amount of money accumulated after n years, including interest
P = the principal amount (initial investment)
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 for
Given:
P = $3500
r = 2.4% or 0.024
n = 1 (compounded annually)
t = 5 years
Plugging these values into the formula:
A = 3500(1 + 0.024/1)^(1*5)
A = 3500(1.024)^5
A = 3500 * 1.123038
A = $3936.36
Total interest earned = $3936.36 - $3500 = $436.36
Therefore, the total interest at the end of 5 years is $436.36.