Question

Suppose you invest $1,000 in an account paying 6% interest per year. a. What is the balance in the account after 3 years? How much of this balance corresponds to "interest on interest"? b. What is the balance in the account after 25 years? How much of this balance corresponds to "interest on interest"? a. What is the balance in the account after 3 years? The balance in the account after 3 years is SE (Round to the nearest cent)

Answer 1

1.
=Amount*(1+r)^t
=1000*1.06^3=1191.016

2.
=Amount*(1+r)^t-Amount*(1+r*t)
=1000*1.06^3-1000*(1+6%*3)=11.016

3.
=1000*1.06^25=4291.8707

4.
=1000*1.06^25-1000*(1+6%*25)=1791.8707