Profits and Loss (Part 1)

Algebra Level 2

Mr Young deposits $30000 with a bank that pays an interest of 5%. How much interest will be earned at the end of 3 years if the rate is compounded every year?

$4729.75 $4728.75 $4738.75 $4725.74

Sin Ndt by SIN NDT , 14, Vietnam

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2 solutions

The formula for such problems is c a p i t a l w i t h i n t e r e s t = c a p i t a l ( 1 + r a t e o f i n t e r e s t 100 ) n u m b e r o f y e a r s capital with interest =capital \left (1+\dfrac{rate of interest }{100}\right )^{number of years } . Using this we get capital with interest = 30000 ( 1 + 5 100 ) 3 = 34728.75 ⟹ =30000\left (1+\dfrac{5}{100}\right )^3=34728.75\implies interest = 4728.75 =\boxed {4728.75} .

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(((30000 x 1.05) x 1.05)) x 1.05) - 30000 = 4728.75.
The interest earned after 3 years is $4728.75.

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