To calculate the interest that Oscar will earn in 1 year, we use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount)
r = the annual interest rate (as a decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested or the loan is in place
In this case, Oscar has $3,000 in the account, the interest rate is 6% (0.06 as a decimal), and the interest is compounded annually (n = 1) for 1 year (t = 1).
Plugging in these values into the formula, we have:
A = $3,000(1 + 0.06/1)^(1*1)
A = $3,000(1 + 0.06)^1
A = $3,000(1.06)^1
A = $3,000*1.06
A = $3,180
Therefore, Oscar will earn $3,180 - $3,000 = $180 in interest in 1 year.
Oscar has $3,000 in an account that earns 6% interest compounded annually.
To the nearest cent, how much interest will he earn in 1 year
1 answer
1 answer