What is the compound interest if the principle is 2500, the rate is 8%, the time is 4 years, and it's compounded annually? Please add explanation

901.22

Step-by-step explanation:

It is given that,

Principal = 2500

Rate of interest = 8% = 0.08 compounded annually.

No. of times interest compounded in a period = 1

Time is 4 years.

Formula for amount is

where, P is principal, r is rate of interest, n is number of times interest compounded in period and t is number of years.

Substitute P=2500, r=0.08, n=1 and t=4 in the above formula.

So, the compound interest is

Therefore, the compound interest is 901.22.

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