SOLUTION: find compound interest on $450 for 2 years at 10% per annum compounded yearly

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Question 539049: find compound interest on $450 for 2 years at 10% per annum compounded yearly



Answer by jpg7n16(66) About Me  (Show Source):
You can put this solution on YOUR website!
Use this formula:
p%2A%28%281%2Bi%29%5En%29=x
p=original principal
i=interest rate per compounding period
n=number of compounding periods
x=new amount of money
So start pulling pieces from the question.
-What was the original amount you started with? $450 (p)
-What is the interest rate per compounding period? 10% (i)
-How many times does it compound? 2 (n)
-We are looking for X
So take the original formula
p%2A%28%281%2Bi%29%5En%29=x
substitute in what you know, and solve for X
450%2A%28%281%2B.10%29%5E2%29=x
x=450%2A%281.1%5E2%29=450%2A1.21=544.50
So you started with $450 and ended with $544.50. How much does that mean you earned?
544.50-450=94.50