Question
Roman saves $500 each year in an account earning interest at an annual rate of 4% compounded annually. How much interest will the account earn at the END OF THE FIRST THREE YEARS?
I think I am confusing simple and compounded interest. The answer I got was $123.23
Am I waaaaaay off and over thinking this??? TIA for your help!!!
I think I am confusing simple and compounded interest. The answer I got was $123.23
Am I waaaaaay off and over thinking this??? TIA for your help!!!
Answers
Steve
if you'd show your work, we could tell whether you were confused or not.
After 3 years, Roman would have
500*1.04^3 = 562.43
so, he earned $62.43
No way to tell how you got your answer. Way too high
After 3 years, Roman would have
500*1.04^3 = 562.43
so, he earned $62.43
No way to tell how you got your answer. Way too high
Anuwar
the answer is 1440 because it is asking for the earning not the interest it is the answer because 4 percent of 500 is 20 and 20 minus 500 is 480 and 480 * 3 is equally to 1440.