Answer:
You would have $343.37 at the end of the 2 years.
Step-by-step explanation:
Interest earned is like bonus money the bank pays you just for keeping money
[tex]\mathrm{Compund\:Interest\:Formula}:\quad A = P { \left( 1+ \dfrac{ r }{ n } \right) }^{ nt }[/tex]
P: the starting balance of the account (also called initial deposit, or principal)
A: the new balance in the account after N years.
t: the number of years or time
r: the interest rate, (in decimal form)
n: the number of times the interest is compounded each year.
Annually = each year = 1
P =$300, r = 7%, t = 2, n = 1, A = ?
Substitute the numbers into the "Compound Interest Formula".
[tex]A = 300 { \left( 1+ \dfrac{ 0.07 }{ 1 } \right) }^{ 1 \times 2 }[/tex]
[tex]\mathrm{Anything\:divided\:by\:1\:gives\:itself}[/tex]
[tex]A = 300 { \left( 1+0.07 \right) }^{ 1 \times 2 }[/tex]
[tex]\mathrm{Add\:1\:and\:0.07\:to\:get\:1.07}[/tex]
[tex]A = 300 \times { 1.07 }^{ 1 \times 2 }[/tex]
[tex]\mathrm{Multiply\:1\:and\:2\:to\:get\:2}[/tex]
[tex]A = 300 \times { 1.07 }^{ 2 }[/tex]
[tex]\mathrm{Calculate\:1.07\:to\:the\:power\:of\:2\:and\:get\:1.1449}[/tex]
[tex]A = 300 \times 1.1449[/tex]
[tex]\mathrm{Multiply\:300\:and\:1.1449\:to\:get\:343.47}[/tex]
[tex]A = 343.47[/tex]
So you would have $343.37 at the end of the 2 years.
Look at the chart
[tex]\mathrm{Year}\quad \mathrm{Year\: Interest}\quad \mathrm{Total\:Interest}\quad \mathrm{Balance}\\\quad1\quad\quad\quad $21.00\quad\quad\quad\quad $21.00\quad\quad\quad\quad $321.00\\\quad2\quad\quad\quad $22.47\quad\quad\quad\quad $43.47\quad\quad\quad\quad $343.47[/tex]
