If $5,600 is deposited into an account paying 5% interest compounded annually (at the end of each year), how much money is in the account after 3 years?
Are you familiar with the formula
Amount = Principal(1+i)^n ?
Amount = 5600(1+.05)^3
= 5600(1.05)^3
etc.
$5,600 x 5% = 280 x 3 = $840 will be in the account after 3 years.
sorry glenda...when u involve compound interest..u have to use the formula Reiny used. Simple percentages cannot be used.
Hope this helps.
To solve this problem using the compound interest formula, you can follow these steps:
Step 1: Identify the variables in the formula:
- Principal (P): $5,600 (initial deposit)
- Interest rate (r): 5% or 0.05 (converted to decimal)
- Time (t): 3 years
Step 2: Substitute the values into the formula:
Amount = Principal(1 + r)^t
Amount = $5,600(1 + 0.05)^3
Step 3: Simplify the calculation:
Amount = $5,600(1.05)^3
Step 4: Calculate the result:
Amount = $5,600(1.05)(1.05)(1.05)
Amount = $5,600(1.157625)
Amount ≈ $6,480.25
Therefore, the amount of money in the account after 3 years will be approximately $6,480.25.
To calculate the amount of money in the account after 3 years with compound interest, you should use the formula:
Amount = Principal(1+i)^n
where:
- Principal is the initial amount deposited ($5,600 in this case)
- i is the interest rate per compounding period (5% or 0.05 as a decimal)
- n is the number of compounding periods (3 years in this case)
Plugging in the values into the formula:
Amount = 5600(1+0.05)^3 = 5600(1.05)^3
Evaluating the expression:
Amount = 5600(1.05)^3
= 5600(1.157625)
≈ $6465.88
Therefore, the amount of money in the account after 3 years will be approximately $6,465.88.