What is the interest compounded annually when 5000 is invested in an account paying 6.38 percent interest for 10 years?
At the end of the first year, the balance in the account is:
5000(1+.0638).
At the end of the second year, the balance in the account is:
5000(1+.0638)(1+.0638).
At the end of the third year, the balance in the account is:
5000(1+.0638)(1+.0638)(1+.0638).
At the end of the t year, the balance in the account is:
5000(1+.0638)^t.
So, at the end of the tenth year, the balance in the account is
5000(1+.0638)^10 = 9,280.47. $5,000 is your principal, and the
remaining ($9,280.47 - $5,000) = $4,280.47 is the interest.