Question

If you deposit $2000 in a savings account that pays an interest equal to 6% Compounded continuously. Whats the balance at the end of 3 years?

Answer 1

The formula for finding compound interest is as follows:-

C.I = P [ ( ( 1 + ( r / 100 ) ) ^ n ) - 1 ]

Where C.I is the compound interest.

r is the rate of interest

n is the number of years

P is the principal amount

Here, C.I = ?

r = 6%

n = 3 years

P = $2000

C.I = 2000 [ ( ( 1 + ( 6 / 100 ) ) ^ 3 ) - 1 ]

C.I = 2000 [ ( 1 + 0.06 ) ^ 3 ) - 1 ]

C.I = 2000 [ ( 1.06 ) ^ 3 ) - 1 ]

C.I = 2000 [ ( 1.191016 ) - 1 ]

C.I = 2000 * ( 0.191016 )

C.I = $ 382.032

Balance at the end of three years = $2000 + $382.032 = $2382.032