ANSWERS: 3
  • It's not that hard. For each one do this. Assuming that the percentage interest is per year: (5/100) * 250. Then take that answer and add to the original amount 3 times (that's because it's 3 years). Do the same for the rest.
  • Assumming the interest rates are per annum and the investment is compounded annually: 289.41 1250.32 3121.25 477.53 1467.81 4905.38
  • $250 at 5% for 3 years If if was simple interest it would be 250 * 0.05 * 3 Compound interest adds the interest back in each year. Assuming the percents are compounded per year (add in the interest at the end of the year): After the first year you have $250 * (1 + 0.05) where 1 is the original amount and 0.05 is the interest. After the second year you have $250 * (1 + 0.05) * (1 + 0.5) = $250 * (1.05)^2 After the third year: $250 * (1.05)^3 Typically, the bank rounds down the interest at the end of each period so as to make them maximum amount of spare cents (and the villian in one of those old superman films too). So you have to do it per year instead: $250 * 1.05 = $262.50 $262.50 * 1.05 = $275.62 $275.62 * 1.05 = $289.40 EDIT: Looking at the other sums: 2680 at 9.1 for 1 3/4 years Hold up! This one doesn't fit the pattern. It doesn't make sense to ask for 1 3/4 years if the interest is compounded at the end of the year as the answer is the same as 1 year. Either the interest is compounded more often than at the end of each year (but the question doesn't say) or we are talking simple interest, in which case where did the interest go? or some more complex scheme: such as putting paying the interest due at the end of the year in installments throughout the year.

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