Question

$38,000 invested at 2% annual interest for 3 years compounded

Answer 1

Compound interest formula

`A=P(1+i)^n`

where:

• A is the final amount including principal

,

• P is the principal amount

,

• i is the interest rate per year (as a decimal)

,

• n is the number of years invested

Replacing with P = 38000, i = 0.02, and n = 3, we get:

`A=38000(1+0.02)^3=40325.9`