What will be the compound interest on $4000 at an annual interest rate of 9% for

What will be the compound interest on $4000 at an annual interest rate of 9% for 2 years?

What will be the compound interest on $4000 at an annual interest rate of 9% for 2 years?

Correct Answer: 752.40

Step 1: Identify the principal amount (P), which is $4000.
Step 2: Identify the annual interest rate (r), which is 9%. Convert this to decimal form by dividing by 100: 9% = 0.09.
Step 3: Identify the number of years (t), which is 2 years.
Step 4: Use the compound interest formula: A = P(1 + r)^t, where A is the total amount after t years.
Step 5: Substitute the values into the formula: A = 4000(1 + 0.09)^2.
Step 6: Calculate (1 + 0.09) = 1.09.
Step 7: Raise 1.09 to the power of 2: (1.09)^2 = 1.1881.
Step 8: Multiply this result by the principal: A = 4000 * 1.1881 = 4752.40.
Step 9: To find the compound interest, subtract the principal from the total amount: Compound Interest = A - P = 4752.40 - 4000.
Step 10: Calculate the compound interest: 4752.40 - 4000 = 752.40.

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