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, we can use the formula:
A = P(1 + r/n)^(nt)
Where:
A = the final amount including interest
P = the principal amount (RM1800)
r = annual interest rate (7% or 0.07)
n = number of times interest is compounded per year (in this case, annually)
t = number of years (3)
Plugging in the values:
A = 1800(1 + 0.07/1)^(1*3)
A = 1800(1.07)^3
A = 1800(1.225043)
A ≈ 2205.08
The compound interest earned on RM1800 at an annual interest rate of 7% compounded annually for 3 years is approximately RM2205.08 - RM1800 = RM405.08.