Kelly deposits $1000 in a three year GIC compounding annually at 4 percent per year. How much interest would she earn by maturity?

Question

Quizplus · Accepted Answer

The interest earned can be calculated using the formula for compound interest: A = P(1 + r/n)^(nt). Here, P = $1000, r = 0.04, n = 1, and t = 3. The total amount A = 1000(1 + 0.04)^3 = $1124.86. The interest earned is $1124.86 - $1000 = $124.86.

Kelly Deposits $1000 in a Three Year GIC Compounding Annually