If $1000 was invested at an annual interest rate of 5.6% compounded annually, which of the following represents the amount the investment was worth after 3 years?


A. \(1000 (1.056)(3)\)

B. \(1000 (3+1.056)\)

C. \(1000 (1+3(0.056))\)

D. \(1000 (1+(0.056)^3)\)

E. \(1000 (1.056)^3\)

It should be Amount instead of CI

CI amount calculated as below:

\(Amount = P (1+\frac{r}{100})^n\)

CI = Amount - P

Hi

why its E?..I thought its D according to formula

Hi All,

We're told that $1000 was invested at an annual interest rate of 5.6% COMPOUNDED ANNUALLY. We're asked which of the following represents the amount that the investment was worth after 3 years.

The Compound Interest Formula is one of two interest rate formulas that you need to know for Test Day. It is:

Principal x (1 + R)^T where R is the annual interest rate and T is the number of years (note: if interest is compounded MORE than once per year, you divide R by the number of calculations and multiply T by that same number of calculations).

Here, we're given all of the numbers to 'plug in', which gives us:

$1000(1 + 0.56)^3

Final Answer:

GMAT assassins aren't born, they're made,
Rich
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