Question

bobby uses $250 of his share to open a bank account . This account pays compound interest at a rate of 1.6% per year. calculate the amount in the bank after 3 years

Answer 1

Bobby will have approximately $262.28 in his bank account after 3 years if he deposits $250 at an annual compound interest rate of 1.6%.

Step-by-step explanation:

Bobby would like to know how much money he will have in his bank account after 3 years if he deposits $250 with an annual compound interest rate of 1.6%. To calculate the amount in the account after 3 years, we can use the formula for compound interest: A = P(1 + r/n)^(nt), where:

• P is the principal amount (the initial amount of money)
• r is the annual interest rate (in decimal form)
• n is the number of times that interest is compounded per year
• t is the time the money is invested for, in years

In Bobby's case, since the interest is compounded annually, n is 1. The formula simplifies to A = P(1 + r)^t. Substituting the values:

1. P = $250
2. r = 1.6% or 0.016
3. n = 1
4. t = 3 years

So, the calculation will be A = 250(1 + 0.016)^3.

Calculating the amount yields: A = 250(1.016)^3 = 250(1.0491) ≈ $262.28.

Therefore, after 3 years, Bobby will have approximately $262.28 in his bank account.