SOLUTION: If $8,000.00 is deposited in a bank that compounds interest anually at 5%, then what is the interest paid at the end of the second year?

Question 201735: If $8,000.00 is deposited in a bank that compounds interest anually at 5%, then what is the interest paid at the end of the second year?
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
If $8,000.00 is deposited in a bank that compounds interest anually at 5%, then what is the interest paid at the end of the second year?
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A(t) = P(1+(r/n))^(nt)
A(2) = 8000(1+(0.05)/2))^(1*2)
A(2) = 8000(1+0.025)^2
A(2) = $8405.00
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Amount of interest earned is $405.00
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Cheers,
Stan H.
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