What is the total amount after 5 years if $1000 is invested at a compound intere

What is the total amount after 5 years if $1000 is invested at a compound interest rate of 3% per annum?

What is the total amount after 5 years if $1000 is invested at a compound interest rate of 3% per annum?

Step 1: Identify the principal amount (P), which is $1000.
Step 2: Identify the annual interest rate (r), which is 3% or 0.03 in decimal form.
Step 3: Identify the number of times interest is compounded per year (n), which is 1 for annual compounding.
Step 4: Identify the number of years the money is invested (t), which is 5 years.
Step 5: Use the compound interest formula: Amount = P(1 + r/n)^(nt).
Step 6: Substitute the values into the formula: Amount = 1000(1 + 0.03/1)^(1*5).
Step 7: Calculate the expression inside the parentheses: 1 + 0.03 = 1.03.
Step 8: Raise 1.03 to the power of 5: (1.03)^5 = 1.159274.
Step 9: Multiply this result by the principal amount: 1000 * 1.159274 = 1159.27.
Step 10: The total amount after 5 years is $1159.27.

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