Find the compound interest on 200 invested for three years at 8% per annum
The formula to calculate compound interest is:
A = P(1 + r/n)^(nt)
where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (initial deposit or loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested/borrowed for
In this case, P = 200, r = 0.08, n = 1 (since it is compounded annually), and t = 3.
A = 200(1 + 0.08/1)^(1*3)
A = 200(1 + 0.08)^3
A = 200(1.08)^3
A = 200(1.259712)
A = 251.9424
Therefore, the future value after 3 years is 251.9424.
To find the compound interest, we subtract the principal investment amount from the future value:
Compound Interest = 251.9424 - 200
Compound Interest = 51.9424
Therefore, the compound interest on $200 invested for three years at 8% per annum is $51.94.