calculating interest earned on investment?

Calculate the interest earned on an investment of $2000, with in interest rate of 3% compounded annually, for 3 years.

3 Answers

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  • Ian H
    Lv 7
    1 month ago

    2000 [(1.03)^3 – 1] ~ $185.46

    Equivalent to about 9.27 % if it were simple interest

    Note: 2000(0.03) = 60. That is OK for calculating the interest on first year,

    but 2000(0.03)^2 is only 1.8 and 2000(0.03)^3 is even smaller

    because these ae only calculating the interest on the interest

  • 2000 * (1 + 0.03/1)^(3 * 1) - 2000 =>

    2000 * (1.03^3 - 1) =>

    2000 * (1.03 - 1) * (1.03^2 + 1.03 + 1) =>

    2000 * 0.03 * (1.0609 + 1.03 + 1) =>

    20 * 3 * 3.0909 =>

    2 * 3 * 30.909 =>

    2 * (90 + 2.7 + 0.027) =>

    2 * 92.727 =>

    185.454

    185.45 in interest

  • A = 2000(0.03)^3

    Might be wrong though 

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