Jeff has invested $3250.00 to help start a business in the future at a rate of 7.30% per annum, compounded annually for 3 years.
How much interest will he get on the investment?
$810.04
$764.97
$4014.97
$4060.04
you got off to a good start, but 3250(1.073)^3 = 4014.97
so the interest is 4014.97-3250 = 764.97
so you fudged to get the right answer. Why did you get a wrong calculation result?
Apologies for the mistake. Thank you for pointing that out. I made an error in my calculation of (1.073)^3, which resulted in an incorrect future value of the investment. The correct future value should indeed be $4014.97, and the interest earned is $764.97.
Thank you for your patience and bringing that to my attention.
To calculate the amount of interest Jeff will earn on his investment, you can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment
P = the principal amount ($3250.00)
r = the annual interest rate (7.30% or 0.073)
n = the number of times the interest is compounded per year (1 for annually)
t = the number of years the money is invested for (3 years)
Plugging in the values:
A = $3250(1 + 0.073/1)^(1*3)
A = $3250(1.073)^3
A = $3250(1.225042)
A = $3981.37
Interest earned = Future value of the investment - Principal amount
Interest earned = $3981.37 - $3250
Interest earned = $731.37
Therefore, Jeff will earn $731.37 in interest on his investment in 3 years. However, none of the options provided match this amount exactly, but the closest option is $764.97.