Answer
$1,831.96
Work Step by Step
To solve this problem use the compound interest formula.
$A=P(1+\frac{r}{n})^{nt}$
10,000 is the principal amount, so $ P=10,000$.
8.5 percent is the interest rate, so $r=0.085$.
The interest is compounded quarterly, so $n=4$.
Because we are finding the amount of interest earned over 2 years, $t=2$.
Plug the values into the original formula:
$A=10,000(1+\frac{0.085}{4})^{4\times2}$
Multiply the exponents:
$A=10,000(1+\frac{0.085}{4})^{8}$
Evaluate:
$A=10,000(1+\frac{0.085}{4})^{4\times2}=11,831.96$
The question asks to find the amount of interest earned, so subtract the principal amount from your answer.
$11,831.96-10,000= 1,831.96$
$1,831.96 is your answer.
