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2 October, 00:04

Christopher deposited $1 in a savings account earning 10% interest, compounded annually.

To the nearest cent, how much interest will he earn in 3 years?

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  1. 2 October, 03:13
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    To the nearest cent, Christopher will earn $ 0.13 in 3 years

    Step-by-step explanation:

    Let's recall that the formula of the compounded interest is:

    A = P * (1 + r/n) ^nt, where

    A = Future value

    P = Initial deposit

    r = Interest rate

    n = number of times interest applied per time period

    t = number of time periods elapsed

    Replacing with the values we know:

    A = P * (1 + r/n) ^n

    A = 1 * (1 + 0.1/1) ³°¹

    A = 1 * 1.1³

    A = 1 * 1.1331

    A = 1.13

    Interest = Future value - Initial deposit

    Interest = 1.13 - 1

    Interest = 0.13
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