Compound Interest Practice

Question Icon

Question 2

Calculate the total amount of money accumulated of a $5000 investment with the compound interest rate of 10%. The duration of the loan is 3 years.


Answer Icon

Select and check your answer...

A. $6655
B. $6650
C. $6500
D. $6300

Step by Step Solution

  • Lesson Icon

    Step 1

    We start with the compound interest formula:

    compound interest formula


    • A is the total amount of money (including interest) after n years
    • P is the principal ($5000)
    • r is the interest rate per year (10 รท 100 = 0.1)
    • n is the loan duration in year (3 years).
  • Lesson Icon

    Step 2

    With P=5000, r=0.1 and n=3, we can substitute these values into the formula as shown:

    using the compound interest formula
  • Lesson Icon

    Step 3

    The total amount accumulated is $6655. Hence, the answer is A.