Question

Vincent has 8668 in savings they earns 14% interest, compounded annually. To the nearest cent, how much interest will he earn in 3 years?

Answer 1

Given the following:

Principal (P) = 8668

Rate (R) = 14% = 0.14

Interest for the first year

recall, Interest = P x R

Interest for the first year = 8668 x 0.14

= 1213.52

Principal or the second year = 8668 + 1213.52

= 9881.52

Interest for the second year = 9881.52 x 0.14

= 1383.41

Principal for the third year = 9881.52 + 1383.41

= 11264.93

Interest for the third year = 11264.93 x 0.14

= 1577.09