Leona bought a 1-year, $10,000 certificate of

IMO

Formula of compound interest:

Total amount to pay off (Principal Quantity + Interest) = P(1 + (r/n)^nt

In Which:

P = Principal or Initial amount
r = rate (decimal expression)
n = # periods per year
t = # years

T = 10000(1 + (0.08 / 2)^(2*1)
T = 10000(1.04)^2
T = 10000(1.0816)
T = 10816

So, in order to get the interest paid:

T = P + I; 10816 = 10000 + I

Hence, I = 816

Jan 25, 2015 • Comment

Mike McGarry, Magoosh Tutor

Dec 27, 2013 • Comment