isabel deposits 600 into an account that pays a rate of 4% per year how much interst will i get paid in the first 2 years

Answer 1

Compound interest is calculated by the formula A=P(1+r/n)^nt

A is the total amount invested at the end of time t (2 years in your problem)

P is the initial investment ($600 in your problem)

r is the interest rate (4% in your problem)

n is the number of times the interest is compounded for each time period (one time per year in your problem)

So your formula for the amount invested at the end of two years is:

A=600(1+0.04)¹⁽²⁾

A=600(1.04)²

A=648.96

The interest paid is the value at 2 years minus the initial investment of $600

Interest = $648.96 - $600 = $48.96