help please, i need help on this question
wendy deposited $60 in a savings account earning 10% interest, compounded annually. To the nearest cent, how much interest will she earn in 3 years?
is the answer $79.86?
or is it 19.86
60(1+.10)^3 = 79.86, but that is how much will be in the account.
As you note, only $19.86 of that is the interest, which answers the question asked.
To calculate the interest earned, we need to use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the final account balance (including both the principal and the interest)
P = the principal amount (initial deposit)
r = annual interest rate (in decimal form)
n = the number of times the interest is compounded per year
t = the number of years
In this case:
P = $60
r = 10% = 0.10 (convert percentage to decimal)
n = 1 (interest compounded annually)
t = 3 years
Now, plug in the values to calculate the final account balance:
A = 60(1 + 0.10/1)^(1*3)
= 60(1 + 0.10)^3
= 60(1.10)^3
≈ 60(1.331)
To find the interest earned, subtract the principal amount (P) from the final account balance (A):
Interest = A - P
≈ 79.89 - 60
≈ $19.89
Therefore, Wendy will earn approximately $19.89 in interest after 3 years.