Question

Assume you've just received a bonus at work of $3,875. You deposit that money in the bank today, where it will earn interest at a rate of 6% per year. How much money will you have in the account after 3 years? Enter your answer in terms of dollars and cents, rounded to 2 decimals, and without the dollar sign. That means, for example, that if your answer is $127.5678, you must enter 127.57

Answer 1

To calculate the amount of money you will have in the account after 3 years with an interest rate of 6% per year, we can use the formula for compound interest:

A = P(1 + r)^n

Where:

A = the final amount

P = the principal amount (initial deposit)

r = the interest rate per period (in decimal form)

n = the number of periods

In this case:

P = $3,875

r = 6% per year, or 0.06 (in decimal form)

n = 3 years

Substituting the values into the formula:

A = 3,875(1 + 0.06)^3

Calculating:

A = 3,875(1.06)^3

A = 3,875(1.191016)

A ≈ 4,614.76

After rounding to two decimal places, you will have approximately $4,614.76 in the account after 3 years.