SOLUTION: I need to figure out what "compounded annually" means. Ex: $500 paying 4% interest compounded annually. What does this mean?

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Question 72007This question is from textbook Study Guide and Practice Workbook
: I need to figure out what "compounded annually" means. Ex: $500 paying 4% interest compounded annually. What does this mean? This question is from textbook Study Guide and Practice Workbook

Answer by Nate(3500) About Me  (Show Source):
You can put this solution on YOUR website!
compounded means that you take the interest of per time
annually means per year
I = Prt
I = 500*0.04*t
I = 20t
where t is in years