Question

Your 3 year investment of 20,000 received 5.2% interest compound annually. What is your total return?

Answer 1

Answer:

Given:

Principal  (P) = $20,000 , interest rate compounded annually (r) = 5.2% = $\frac{5.2}{100} = 0.052$ ; n = 1 , t = 3 years.

Using formula :

$A = P(1+\frac{r}{n})^{nt}$

where

A is total return

P is the Principal ,

r is interest rate ,

n is the number of times interest is compounded per year

t is the time in year.

Substitute the given values we have;

$A = 20,000(1+\frac{0.052}{1})^{1 \cdot 3}$

$A = 20000(1.052)^{3}$

Simplify:

A = $23285.05216

Therefore, your total return is, $23285.05216