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6 votes
6 votes
If the simple interest on a sum of money at 5% per annum for 3 years is $

1200, then the compound interest on the same sum for the same period
at the same rate will be .........
*​

User Roberto  Franchini
by
2.3k points

1 Answer

12 votes
12 votes

Answer:

$1207.96

Explanation:

The accumulated value for simple interest is defined by the following formula:

FV=PV(1+it)

we have (where x is the present value or PV)

1200= x(1+.05*3)

Solve for x

1200=1.15x

x=1043.478261

We now need to use the equation for annually compounding interest


image

We have


image

which rounds to

$1207.96

User Til
by
2.6k points