Question

3. A business account was opened with $225,000earning 6.25% interest compounded yearly. Whatis the balance in the account after 3 years? Howmuch interest is earned after 3 years?

Answer 1

Balance = 269,897.15

Interest earned 44,879.15

Step-by-step explanation:

The compound interest formula is

`A=P(1+r)^t`

where P is the principal amount, is the interest rate, and t is the time interval.

Now in our case, we have

P = $225,000

r = 6.25%/100

t = 3 years

therefore, the final amount is

`A=225,000(1+(6.25)/(100))^3`
`\boxed{A=\$269,879.15}`

which is the balance earned in 3 years.

The interest earned is the final amount minus the initial amount

`\begin{gathered} I=A-P \\ I=\$269,879.15-\$225,000 \end{gathered}`
`\boxed{I=\$44,879.15}`

which is the interest earned in 3 years.