Question

I invest $3000 into a savings account with an interest rate of 7 percent. How much interest will I earn over a specific time period?

Answer 1

To calculate the interest earned on a $3000 investment at a 7% interest rate over a specific time period, use the compound interest formula. For a 40-year period, the interest would be $41,923, giving a total amount of $44,923 including the principal.

Step-by-step explanation:

To calculate how much interest you will earn on a $3000 investment at a 7 percent interest rate over a specific time period, you can use the compound interest formula:

I = P(1 + r)^n - P

Where:

• I is the interest
• P is the principal amount ($3000)
• r is the annual interest rate (0.07 for 7%)
• n is the number of years

For example, after 40 years, the interest earned would be calculated as:

I = 3000(1 + 0.07)^40 - 3000

Using this formula, you would find that the interest earned after 40 years is $41,923, which added to the principal gives you a final amount of $44,923.