Question

Pablo deposited $600 in an account earning 2% interest compounded annually.To the nearest cent, how much interest will he earn in 3 years?Use the formula B=p(1+r)t, where B is the balance (final amount), p is the principal (starting amount), r is the interest rate expressed as a decimal, and t is the time in years.

Answer 1

The given information is:

- The initial amount is $600

- The interest rate is 2% (compounded annually)

The given formula is:

`B=p(1+r)^t`

Where B is the balance (final amount), p is the principal (starting amount), r is the interest rate as a decimal, and t is the time in years.

By replacing the known values we obtain the balance after 3 years:

`\begin{gathered} B=600*(1+0.02)^3 \\ B=600(1.02)^3 \\ B=600*1.06 \\ B=636.72 \end{gathered}`

The answer is $636.72