Question

If $3,000.00 is deposited into an account paying 3% interest compounded annually (at the end of each year), how much money is in the account after 4 years? (Round to the nearest cent.)

Answer 1

The compound interest formula is
Amount = P(1+r)ⁿ
where
P=principal,
r=rate of interest per period (year in this case). 5% per annum is written as 0.05
n=number of periods money is deposited.

For example,
$3000 deposited at 5% per annum for 2 years will yield, when compounded yearly:
Amount=3000*(1+0.05)²
=$3307.50

For 3000 invested at 3% interest compounded yearly for 4 years will yield an amount less than $3400 and in which the amount after the decimal point is $33--.53.

Answer 2

Principal is $5,000, rate if interest is 6.5%, and time to repayment is 3 years. Compute the compound interest