Answer:
Step-by-step explanation:
The compound interest formula is expressed as [tex]A = P(1+r/n)^{nt}[/tex]
A is the total amount after n years
P is the amount deposited (principal)
r is the rate (in %)
t is the time (in years)
n is the time of compounding
Given P = $5000, r = 4% = 0.04, t = 5 years, n = 1 year (per annum compound interest)
On substituting into the formula we have;
[tex]A = 5000(1+0.04)^{1(5)} \\A = 5000(1.04)^{5} \\A = 5000*1.2166529\\A = 6,083.26[/tex]
Interest earned = Amount - Principal
Interest earned = $6,083.26 - $5,000
Interest earned = $1,083.26 ≈ $1,083
Hence, the total interest earned in 5 years is $1,083 to the nearest dollars.
