P (1+r) t Using the expression above, choose the correct answers for the new balance and the amount of interest earned in the following compound interest problem. $950 at 7% for 8 years, compounded annually. Total Amount = $ Interest Amount = $

The formula is:

Future value = accumulated amount, F = P (1+r) ^t

P=principal

r=annual interest rate [compounded annually]

t=number of years of loan

Given:

P=950

r=0.07

t=8

F=950 (1.07) ^8

= 1632.28 (total amount)

Interest = total amount - principal

=1632.28 - 950

=682.28