To solve for the amount + interest for compounding interest you will use this formula:
[tex]A = P ( 1 + \frac{r}{n}) ^{nt} [/tex]
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:
[tex]A = P ( 1 + \frac{r}{n}) ^{nt} [/tex]
[tex]A = 2050 ( 1 + \frac{0.04}{1}) ^{1.3} [/tex]
[tex]A = 2050 ( 1 + 0.04) ^{3} [/tex]
[tex]A = 2050 ( 1.04) ^{3} [/tex]
[tex]A = 2050 (1.124864 ) [/tex]
[tex]A = $2305.97 [/tex]
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
