What is the compound interest on a three-year, $100.00 loan at a 10 percent annual interest rate?
$10.00
$21.00
$33.10
$46.41
What is the compound interest on a three-year, $100.00 loan at a 10 percent annual interest rate?
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What is the compound interest on a three-year, $100.00 loan at a 10 percent annual interest rate?
$10.00
$21.00
$33.10
$46.41
To calculate compound interest, you can use the formula:
[ A = P left(1 + frac{r}{n}right)^{nt} ]
Where:
– ( A ) is the amount of money accumulated after n years, including interest.
– ( P ) is the principal amount (the initial amount, $100.00).
– ( r ) is the annual interest rate (decimal form, so 10% = 0.10).
– ( n ) is the number of times that interest is compounded per year.
– ( t ) is the number of years the money is invested or borrowed (3 years).
Assuming the interest is compounded annually (n = 1):
1. Plug in the values into the formula:
[ A = 100 left(1 + frac{0.10}{1}right)^{1 times 3} ]
[ A = 100 left(1 + 0.10right)^3 ]
[ A = 100 left(1.10right)^3 ]
2. Calculate ( (1.10)^3 ):
[ (1.10)^3 = 1.331 ]
3. Now plug that back into the formula to find ( A ):
[ A = 100 times 1.331 = 133.10 ]
4. To find the compound