Question

What is the compund interest on 5,000 over 3 years at 5% interest

Answer 1

788.13 to the nearest hundredth.

Explanation:

Let A be the total amount in the account after 3 years.

The formula is A = P(1 + x/100)^t .

Here P = 5000, x = 5 % and the time t = 3. years.

Amount after 3 years = 5000(1 + 5/100)^3

= 5788.13

So the Interest is 5788.13 - 5000

= 788.13.

Answer 2

Compound interest = 788.125

Explanation:

Points to remember

Compound interest

A = P[1 + R/100]^N

Were A - Amount

P - Principle

R - Rate of interest

N - Number of years

To find the compound interest

Here P - 5,000

R = 5%

N - 3 years

A = P[1 + R/100]^N

= 5000[1 + 5/100]^3

= 5000[1 + 0.05]^3

= 5788.125

Compound interest = A - P

= 5788.125 - 5000

= 788.125