Question

Find the amount of savings if $1000 is deposited for three years at 8% annual interest, compounded annually.

A) $1104.49

B) $1166.40

C) $1259.71

D) $1268.24

Answer 1

C) $1,259.71

Explanation:

For this problem, we will be using the equation

A = P(1 + r)^t

Where P is our initial value, in this case, $1,000

r is our interest rate, represented in decimal format, so

8% / 100% = 0.08

t is our time, in this case, 3 years

Let's fill in our variables in the equation

A = 1,000(1 + 0.08)^3

A = 1,000(1.08)^3

A = 1,000(1.25971)

A = 1,259.71

After the three years of compounded annual interest, the savings account with have $1,259.71.