Math Worksheets

Question: How do I calculate compound annual interests?

I have this problem for math-pre-algebra:
For an account that earns interest compounded annually, use a calculator to find the balance of the account.::::
P=$900, R=5%, T=3 years
HOW DO I FIGURE THIS OUT? PLEASE EXPLAIN SO THAT I CAN DO THE REST OF THE PROBLEMS ON THE WORKSHEET. THANX!!!!!!

Answer: The following formula will give you total amount including principle and interest.

A = P(1+R)^n, where A is total amount, P is principle,
R is interest rate per compounding period, and n is number of compounding period.

In your case, your compounding period is one year(since compounded annually), so the R should be annual rate and n is number of years.

So total would be:

A = 900(1+5%)^3

=900*1.092727

=983.45

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