Based on the given parameters, the value of the investment after 3 years is $629.86
How to determine the amount in five years?
The given parameters about the compound interest are
Principal Amount, P = $500
Interest Rate, R = 8%
Time, t = 3
Compound interests are different from simple interest, and they are calculated using the following compound interest formula
CI = P(1 + R)^t - P
To calculate the amount, we have:
A = P + CI
So, the equation becomes
A = P + P(1 + R)^t - P
Evaluate the like terms
A = P(1 + R)^t
Substitute the known values in the above equation
A = 500 * (1 + 8%)^3
Express 8% as decimal
A = 500 * (1 + 0.08)^3
Evaluate the sum
A = 500 * (1.08)^3
Evaluate the exponent
A = 500 * 1.259
Evaluate the product
A = 629.86
Hence, the value of the investment after 3 years is $629.86
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