Posted by **Debbie** on Thursday, December 11, 2008 at 8:48pm.

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?

This is what I get"

5600 X .05 =280 X 3 =840

- math 115 #17 -
**Ms. Sue**, Thursday, December 11, 2008 at 8:54pm
But what happened to your original $5,600????

Also -- since the interest is __compounded annually__, at the end of the first year you'll have $5,600 + 280 = $5,880

At the end of the second year:

5,880 * 0.05 = 294

294 + 5,880 = $6,174

What will you have at the end of the third year?

- math 115 #17 -
**Christiaan**, Thursday, December 11, 2008 at 8:56pm
I don't understand the reasoning behind your answer.

Anyway, the way to do this is the folliwing.

For every year your money is on the bank, the bank multiplies your balance by 1.05. This means that after 3 years, you get the following:

Money after 3 years = inititial deposit*1.05*1.05*1.05 = 5600 * 1.05^3 = 6482.7

- math 115 #17 -
**Reiny**, Thursday, December 11, 2008 at 8:57pm
you have calculated the simple interest earned by the account after 3 years.

So your account would have 5600 + 840 in it or $6440

in reality you would probably earn compound interest and the amount would be

5600(1.05)^3

= $6482.70

## Answer This Question

## Related Questions

- Math 115 - If $9,000.00 is deposited into an account paying 4% interest ...
- Math - Please check my work, thank you If $7,800 is deposited into an account ...
- mat 115 - If $1,000.00 is deposited into an account paying 3% interest ...
- math - If $7,800 is deposited into an account paying 6% interest compounded ...
- math - If $7,800 is deposited into an account paying 6% interest compounded ...
- math - If $3,000.00 is deposited into an account paying 3% interest compounded ...
- math - If $3,000.00 is deposited into an account paying 3% interest compounded ...
- Math - If $3,000.00 is deposited into an account paying 3% interest compounded ...
- math - If $3,000.00 is deposited into an account paying 4% interest compounded ...
- math - If $5,600 is deposited into an account paying 5% interest compounded ...

More Related Questions