Question

Assuming a 3% interest rate ,$300 invested today in a savings account today will be worth $309 in one year. What will that amount be in 2 and 3 years , and what is the total interest you will earn at the end of the 3years

Answer 1

Answer:

Profit - principal (2nd year) = $318

Profit - principal (3rd year) = $327

Profit at the end of 3rd year = $27

Step-by-step explanation:

We know,

Simple Interest (Profit) = Principal × Interest rate × number of years

Here,

Principal, p = $300;

Interest rate, r = 3% = 0.03

Number of years, n = 1

Therefore, they have calculated the interest = $300 × 0.03 = $9

Therefore, Profit + Principal = $9 + $300 = $309 after 1 year.

After the 2nd year, Profit - Principal = Principal + (P × r × n)

Profit - Principal = $300 + (300 × 0.03 × 2) = $300 + $18 = $318

Profit - principal after 3rd year = Principal + (P × r × n)

= $300 + (300 × 0.03 × 3) = $300 + $27 = $327

Therefore, I will earn $27 as interest at the end of the 3rd year.

Answer 2

You will earn $27.00 at the end of the third year I believe.