You invest $2000 at 5% annual interest for 3 years. How much interest will you earn?
Answer
$315.25
How to solve it
1
Year 1: $2000 × 1.05 = $2100
2
Year 2: $2100 × 1.05 = $2205
3
Year 3: $2205 × 1.05 = $2315.25
4
Interest: $2315.25 - $2000 = $315.25
Hints
Calculate compound interest year by year
Subtract original from final amount