Question

What is the total amount that First Consumer Bank will receive after lending Jane $7,000 for three years at an interest rate of 5 percent, compounded annually?

Answer 1

For the First Year he paid $7350 (7000+5%=7350)
For The second Year he paid $7717.5 (7350+5%=7717.5)
For the Third Year he paid 8103.38 (7717.5+5%=8103.38)

All together is $1103.38 after the 3 years

Answer 2

7,000×1.05^(3)
=8,103.375