What is the total compound interest of a loan for $5,000 with an annual interest rate of 8 percent at the end of a two-year period? $400 $432 $832 $800

Question

History

Itchy

17 February, 01:28

What is the total compound interest of a loan for $5,000 with an annual interest rate of 8 percent at the end of a two-year period? $400 $432 $832 $800

+3

Answers (1)

Know the Answer?

Brent · Answer 1

The formula to find compound interest is

A = P (1 + r/n) ^nt

Use this to solve your problem.

A = 5,000 (1 + 0.08/1) ^1•2

A = 5,000 • 1.1664

A = 5,832

Now this question is only asking about the interest gained. To find this, subtract the original amount from the new amount.

5,832 - 5,000 = 832

Your answer is $832