Answer to Question #138021 in Financial Math for Happy

Question

If you invest 10,000 today in a hotel at 6.5% interest, compounded annually for 4 years. How much interest in interest did the hotel earn over this period of Time

Answer 1

$I=P_0r$

$A=P0+I=P_0+P_0+P_0r=P_0(1+r)$

I is interest, A is principle plus interest, $P_0$ is the principle, r is the rate

To get interest in four years we use simple interest formula;

$I=P_0\times r\times t(time)$

$I=10000\times 0.065\times 4$

$=2600$