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An investment of $100 today is worth $116.64 at the end of two years if it earns an annual interest rate of 8%. How much interest is earned in the first year and how much in the second year of this investment

Respuesta :

The interest earned in the first year is $8.

The interest earned in the second year is $8.64.

What is compound interest?

When an amount of money earns compound interest, both the amount deposited and the interest earned earn an interest.

The formula used to represent compound interest is:

Future value - present value

The formula for calculating future value:

FV = P (1 + r)^n

  • FV = Future value
  • P = Present value
  • R = interest rate
  • N = number of years

$100 x 1.08 = $108

Interest in the first year = $108 - $100 = $8

Interest in the second year = $116.64 - $108 = %8.64

To learn more about compound interest, please check: https://brainly.com/question/26367706

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