What amount of interest will an investment of $7,500 left on deposit for three years at 7%...
Question:
What amount of interest will an investment of $7,500 left on deposit for three years at 7% compounded annually accumulate?
Compounded Interest:
Compound interest is the interest earned on interest. When an investor makes a deposit, interest is earned. This interest is again reinvested in the same deposit. So now, interest is earned on principal as well as the interest which is reinvested. This process is called as compounding of interest.
Answer and Explanation: 1
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We will use below formula to calculate the answer:
{eq}\displaystyle{FV} = \displaystyle{PV * (1+r)^n} {/eq}
where,
- FV = Future value to be...
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What is Compound Interest? - Definition, Formula & Examples
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Chapter 23 / Lesson 16
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When a bank offers compound interest, it figures the interest for each period based on the account's previous balance plus the interest gained in the last period. Review simple interest, compare it to compound interest, and study compound interest's definition, formula, and examples.
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