Question

you deposit $1200 in a savings account that earns interest at a 5.4% rate per year. how much interest will you have earned after 3 years?

Answer 1

Interest earned = 1311.27 - 1200 = $111.27

Explanation:

so I’m pretty sure 111.27…please tell me if I’m right !!

Answer 2

A = P(1 + r/n)nt

A is the amount accumulated, P is the principle (initial) amount, r is the decimal rate, n is the number of times interest is compounded per year, and t is the number of years.

In this question, we are solving for A, P is $1200, r is 0.03, n is 1 (because interest is compounded once per year), and t is 3 years.

Thus:

A = $1200(1 + 0.03/1)1(3) = $1200(1.03)3 = $1311.27

and

Interest earned = 1311.27 - 1200 = $111.27