How much compound interest is earned on $2050 at 4% interest for 3 years, compounded annually? give your answer in dollars and cents. don’t forget to subtract p from a.

To solve for the amount + interest for compounding interest you will use this formula:


Where A = Accrued amount
           P = Principal amount
           r = rate in decimal
           t = number of years
           n = compounding periods per unit of time
Your given:
P = $2050
r = 4% or 0.04
t = 3 years
n = 1 per yr
Now we insert that into your formula:







Now to get the interest just remember that:
I = A - P
I = $2,305.97 - $2,050
I = $255.97
So that is equal to 255 dollars and 97 cents