Question

Sue deposited $3000 in a savings account earning 2% interest over 8 years. What was the total interest Sue earned?

Answer 1

Original Interest: I = Prt
I = (3000)(0.02)(8)
I = (60)(8)
I = 480

Simple Interest: A = P(1 + rt)
A = 3000(1 + (0.02)(8))
A = 3000(1 + 0.16)
A = 3000(1.16)
A = 3480

Compound Interest:
`C = P((1 + r)^(n) - 1)`

`C = 3000(1 - 0.02)^(96) - 1)`

`C = 3000((0.98)^(96) - 1)`

`C = 3000(014 - 1)`

`C = 3000(-0.86)`

`C = -2580`

Payment Amount:
`A = P(r(1 + r)^(n))/((1 + r)^(n) - 1)`

`A = 3000((0.02(1 + 0.02)^(96))/((1 + 0.02)^(96) - 1))`

`A = 3000((0.02(1.02)^(96))/((1.02)^(96) - 1))`

`A = 3000((0.02(6.7))/(6.7 - 1))`

`A = 3000((0.134)/(5.7))`

`A = 3000(0.024)`

`A = 72`