Question

2,500 principal earning 3% compounded annually after 4 years

Answer 1

2,500 principal earning 3% compounded annually after 4 years would become 2813.77.

Explanation:

Given principal amount = 2,500.

Rate of interest = 3% compounded annually.

Time in years = 4 years.

We know, compound interest formula is given by

`A= (1+r)^t`, where A is the final amount, P is the principal amount, r is the rate of interest and t is the time in years.

Plugging P = 2500, r= 3% that is 0.03 and t= 4 in above formula, we get

`A = 2500(1+0.03)^4`

`A = 2500(1.03)^4`

`A = 2500(1.12550881) = 2813.77.`

Therefore, 2,500 principal earning 3% compounded annually after 4 years would become 2813.77.