Sally puts $200.00 in a bank account. This account earns 8% compound interest. How much money is in the account after three years?
A $151.94
B $240.00
C $251.94
D $160.00
I know a and d are wrong, but this is confusing me.
answer is c- 251.94
To calculate the amount of money in the account after three years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = final amount (money in the account after three years)
P = principal amount (initial deposit)
r = annual interest rate (as a decimal)
n = number of times interest is compounded per year
t = number of years
In this case, Sally starts with $200 as her initial deposit, the interest rate is 8% (or 0.08 as a decimal), the interest is compounded annually (n = 1), and she wants to know the amount after three years (t = 3).
Plugging these values into the formula, we have:
A = 200(1 + 0.08/1)^(1 * 3)
A = 200(1 + 0.08)^3
A = 200 * 1.08^3
A ≈ $251.94
Therefore, after three years, the amount of money in the account will be approximately $251.94, which corresponds to option C.
at the end of each year, the account is 8% larger (multiplied by 1.08)
the general formula is ...
amount = initial amount (1 + interest per compounding)^(compoundings)
A = 200 (1 + .08)^3