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August 30, 2014

August 30, 2014

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

This is what I get"

5600 X .05 =280 X 3 =840

- math 115 #17 -
**Ms. Sue**, Thursday, December 11, 2008 at 8:54pmBut 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 8:56pmI 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 8:57pmyou 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

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