If the principal amount is $3000, the interest rate is 7%, and the time period is 2 years compounded annually, what is the total amount after compound interest?*$3681.00$3447.70$3141.00$3200.00
Question
If the principal amount is 3681.003141.00$3200.00
Solution
To calculate the total amount after compound interest, we use the formula:
A = P (1 + r/n)^(nt)
where: A = the amount of money accumulated after n years, including interest. P = principal amount (the initial amount of money) r = annual interest rate (in decimal) n = number of times that interest is compounded per year t = time the money is invested for in years
Given in the problem: P = $3000 r = 7% = 0.07 (in decimal) n = 1 (since it's compounded annually) t = 2 years
Substituting these values into the formula:
A = 3000 (1 + 0.07/1)^(1*2) A = 3000 (1 + 0.07)^2 A = 3000 * 1.07^2 A = 3000 * 1.1449 A = $3434.70
So, the total amount after 2 years will be 3447.70.
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