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

take you amount and add 1 with the interest in brackets. close the brackets and square your year, then calculate.


formula:
7000(1+5%) multiplied by the year
=8103.38

Answer 2

Answer: $8103.375

Explanation:

The compound amount after x years is given by :-

`A=P(1+r)^x`, where p is the principal amount , r is the rate of interest .

Given: The principal amount = $7,000

The rate of interest per year = 5 % = 0.05

Time in years = 3

Then, the compound amount is given by :_

`A=7,000(1+0.05)^3\\\\\Rightarrow\ A=7,000(1.05)^3\\\\\Rightarrow\ A=\$8103.375`