Question

Gary deposited $20 in a savings account earning 10% interest, compound annually. to the nearest cent, how much will he have in 3 years

Answer 1

Answer: $26.62

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Work Shown:

P = 20 is the amount deposited

r = 0.10 is the decimal form of the 10% interest rate

n = 1 means we compound 1 time per year (annually)

t = 3 is the number of years

Plug those four values into the compound interest formula below

A = P*(1+r/n)^(n*t)

A = 20*(1+0.1/1)^(1*3)

A = 20*(1+0.1)^(3)

A = 20*(1.1)^(3)

A = 20*1.331

A = 26.62

Answer 2

Answer: $26.6

Explanation:

The formula for compound interest is stated as A = P*(1+r/n)^(n*t), where P is the Principal, r = rate, n is the number, and t is the time.

Given from the question,

P= 20

r = 10% = 10/100 = 0.01

n = 1 (compounded once per year)

t = 3 years

Slot the values into the formula:

A = 20 (1+0.1/1)^(1*3).....open the bracket

A = 20 (1+0.1)^3

A = 20 (1.1)^3

A = 20×1.33

A = 26.6

I hope this helps.