Compound Interest Calculation: Find Principal and Interest Earned

Calculate the original principal and total interest earned on an investment with compound interest.

Answer

Here’s how to solve the problem step-by-step:

Understand the problem: Julian inherited money and deposited it into a bank account with a 14% annual interest rate, compounded annually. After 4 years, the account balance is $9,186.00. We need to find the original principal (the amount Julian inherited) and then calculate the interest earned.
Formula for compound interest: The formula for compound interest is:

where:
- is the future value of the investment/loan, including interest
- is the principal investment amount (the initial deposit or loan amount)
- is the annual interest rate (as a decimal)
- is the number of years the money is invested or borrowed for
Plug in the known values:
- So, the equation becomes:
Solve for P (the principal):
Calculate the interest earned:
Interest earned = Future value - Principal
Interest earned =
Interest earned =

Therefore, Julian earned approximately $3949.97 in interest.

Final Answer: The final answer is

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