Question

You deposit $870 into a savings account that pays 3.7% interest compounded

annually. What is the balance of your account at the end of 3 years?

Answer 1

$970. 19

Explanation:

Using the compound interest formula Accrued Amount = P (1 + r)^t

where Accrued amount is to be determined

P = principal; $870

r = 3.7% = 0.037

t = number of years = 3

Therefore

Accrued amount = 870 (1 + 0.037)^3

Accrued amount = 870 x 1.037^3

= 870 x 1.1152

= 970. 19

Hence balance of the account at the end of 3 years is $970. 19