Answer to Question #160076 in Financial Math for Perseverance

Question

Mr Hendricks invested R6000 at 7% p.a for 3 years in a fix deposit account. What is the interest earned over 3 years and what is the amount paid to Mr Hendricks on Maturity?

Answer 1

Maturity value:

$A=P(1+i)^n$

$P$ is principal amount, $i$ is interest rate, $n$ is the number of compounding periods

$A=6000\cdot1.07^3=R7350.26$

Interest earned amount:

$I=A-P=7350.26-6000=R1350.26$