Description
Calculate compound interest: Principle = 1000 compounded annually, for a period of 10 years, at a 11%, 3% and 5% interest rate.
Explanation & Answer
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A = P(1+r/n)^nt
Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested or borrowed for
for 11 % interest rate
A= 1000 ( 1 +0.11)^10 = 2839.42
I= A-P
I = 2839.42 - 1000
I= 1839. 42
for 5%
A= 1000 ( 1+ 0.05)^10 = 1628.89
I = 1628.89 - 1000
I= 628.89
for 3%
A = 1000 ( 1 + 0.03)^10 =1343.92
I = 1343.92 -1000
I= 343.92
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