Question

If $400$ dollars is deposited in a bank account for $4$ years at $8$% per annum . Calculate interest using compound interest formula.

• A. $144.0$
• B. $124.0$
• C. $138.05$
• D. $144.195$

Answer 1

Answer: (D)

$144.195$

Given,
Priciple, $p=400$
Rate of compound interest, $r=8$%
Tome, $t=4$
Compound interest, $ci=A-p$ $({\because }_A=$amount after t year)
$ci=p(1+\frac{r}{100}{)}^t-p$
Put the values of $p,r,$and $t$ in the above equation and get the value of compound interest, $ci$
$ci=400(1+\frac{8}{100}{)}^4-400$
$=400(\frac{108}{100}{)}^4-400$
$=400(1.08{)}^4-400$
$=400\times 1.36-400$
$=544.195-400$
$=144.195$ dollars