Question

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

Answer 1

Given:

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

Using formula :

`A = P(1+(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+(0.052)/(1))^(1 \cdot 3)`

`A = 20000(1.052)^(3)`

Simplify:

A = $23285.05216

Therefore, your total return is, $23285.05216