Chapter 6, Problem 47CR

To determine

To calculate the total amount if the interest is compounded annually.

Answer to Problem 47CR

$3464.21

Explanation of Solution

Given:

Principal: $2750

Rate of interest: 8%

Time: 3 years

Formula used:

Compound interest $,I=P{\left(1+\frac{r}{100}\right)}^n$

Calculation:

Using the compound interest formula and substituting the known values,

  $\begin{array}{l}I=P{\left(1+\frac{r}{100}\right)}^n\\ I=2750{\left(1+\frac{8}{100}\right)}^3\\ I=2750{\left(1+0.08\right)}^3\\ I=2750{\left(1.08\right)}^3\\ I=2750\left(1.259712\right)\\ I=3464.208\end{array}$

Rounding off to the nearest cent, the compound interest is,

  $I=3464.21$

Conclusion:

Therefore, the total amount of compound interest is $3464.21.