Your Principal, P, is $400. Your interest rate, expressed as a decimal, is 0.03. Here, n is 1, since there is just 1 compounding period per year.
How much would you have after 16 years under such circumstances?
A = Amount = $400(1+0.03)^16. => $400 (1.03)^16 = $400(1.60)
Thus, you would have accumulated $641.88 after 16 years. Sounds like a pretty good deal to me. ;)
Where are the statements???
Answer:
Assume a business man banks an amount of principle P, for n years at a compound interest of r%. His accumulated amount after n years will be given by formula:
![{ \boxed{ \rm{accumulated =P(1 + \frac{r}{100} ) {}^{n} }}}](https://tex.z-dn.net/?f=%7B%20%5Cboxed%7B%20%5Crm%7Baccumulated%20%3DP%281%20%2B%20%20%5Cfrac%7Br%7D%7B100%7D%20%29%20%7B%7D%5E%7Bn%7D%20%20%7D%7D%7D)
- P is the principle
- r is the interest
- n is the period
Note that compound interest borrows a hint from the geometric progression series.
- for 5 years, at rate of 10% with principle of 5000;
Accumulated = 5000(1 + 10%)^5
Accumulated = 5000(1 + 0.1)^5
Accumulated = 5000 × 1.61
Accumulated = 8052.55 /=