I’m learning about growth decay,cumulative and percent change.

Question

You deposit $2000 ina five year certificate of deposit that pays 1.85% interest compoundled annuall. Determine your account balance when certificate comes due.

Answer 1

 

Use A = P*(1 + r/n)^n*t  for compound interest

 

where:  A = final amount ($)

            P = principle amount  = $2000

            r = interest rate (as fraction) = 1.85%/100% = 0.0185

            n = number of times compounded annually = 1

            t = number of yrs = 5

 

  A = $2000*(1 + 0.0185)⁵  =  $2000*(1.095986) = $2,191.97      your profit is $191.97 after 5 years :-(