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Question

How many dollars in interest are earned in two years on a deposit of 10,000 invested at 4.5%$ and compounded annually? Express your answer to the nearest cent.

Accepted Answer

After two years, at a 4.5 percent annual interest rate, the investment will have grown to 10000 (1.045)^2 = 10920.25, so the interest earned is 10920.25 - 10000 = 920.25.