Problema Solution
INTEREST The formula A=P(1+r)^t can be used to calculate the value of an investment A after t years that starts with a principal p and has an interest rate of 5% how much interest will he earn in 3 years?
Answer provided by our tutors
r = 0.05 or 5% annual interest rate
t = 3 years
P = the principal
A = the future value
I = A - P is the interest
A = P(1 + r)^t
I = P(1 + r)^t - P
I = P((1 + r)^t - 1)
I = P((1 + 0.05)^3 - 1)
I = P*0.157625
He will earn P*0.157625 dollars interest.