The compound interest on a principal amount of RM1800 for 3 years at an annual interest rate of 7% compounded annually is
To calculate the compound interest on a principal amount of RM1800 for 3 years at an annual interest rate of 7% compounded annually, we use the formula:
Compound Interest = P(1+r/n)^(nt) - P
Where:
P = principal amount (RM1800)
r = annual interest rate (7%)
n = number of times interest is compounded per year (1 time annually)
t = number of years (3 years)
Plug in the values:
Compound Interest = 1800(1 + 0.07/1)^(1*3) - 1800
= 1800(1 + 0.07)^(3) - 1800
= 1800(1.07)^(3) - 1800
Using a calculator or by calculating manually:
= 1800(1.225043) - 1800
= 2250.08 - 1800
= 450.08
Therefore, the compound interest on a principal amount of RM1800 for 3 years at an annual interest rate of 7% compounded annually is RM450.08.