If you deposit $100 now with interest rate of 3 percent, after the first period you will have an amount equal to (100 + 100* 0.03) = 100(1 + 0.03); after the second period the amount will be 100(1 + 0.03) + [100(1 + 0.03)]*0.03 = 100(1 + 0.03)(1 + 0.03) = 100(1 + 0.03) 2 . If we continue this reasoning, we find out that the amount in the account after n periods is equal to $100(1 + 0.03) n . In general, if the interest rate is i percent, the formula for compound interest rate becomes (1 + i%/100) n .
-Suppose there is a tax rate of t percent on capital gain. How does our formula change?

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The Answer of If you deposit $100 now with interest rate of 3 percent, after the first period you will have an amount equal to (100 + 100* 0.03) = 100(1 + 0.03); after the second period the amount will be 100(1 + 0.03) + [100(1 + 0.03)]*0.03 = 100(1 + 0.03)(1 + 0.03) = 100(1 + 0.03) 2 . If we continue this reasoning, we find out that the amount in the account after n periods is equal to $100(1 + 0.03) n . In general, if the interest rate is i percent, the formula for compound interest rate becomes (1 + i%/100) n .
-Suppose there is a tax rate of t percent on capital gain. How does our formula change?

If You Deposit $100 Now with Interest Rate of 3