you invest $1500 for three years.find the amount you earn at an annual rate of 8.25%
To find the amount you earn on an investment, you can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = Total amount after interest
P = Principal amount (initial investment)
r = Annual interest rate (as a decimal)
n = Number of times interest is compounded per year
t = Number of years
In this case, you have:
P = $1500 (initial investment)
r = 8.25% (annual interest rate, expressed as 0.0825)
t = 3 years
n = 1 (interest is compounded annually)
Inserting these values into the formula, we have:
A = 1500(1 + 0.0825/1)^(1*3)
Calculating the expression inside the brackets first:
A = 1500(1 + 0.0825)^(3)
After simplification:
A = 1500(1.0825)^(3)
Evaluating the exponent:
A = 1500 * 1.0825^3
Finally, calculate the result:
A = 1500 * 1.259466015625
A ≈ $1,889.20
Therefore, the amount you earn over three years at an annual rate of 8.25% would be approximately $1,889.20.