What is the compound interest on a three-year, $100.00 loan at a 10 percent annual interest rate?

Solution:

Compound interest can be determined as:

Compound Interest = Amount - Principal

CI = P(1 + (r/n) )nt - P

Where P is the principal amount

r is the rate of interest

t is the time

n is the number of times the interest is compounded per unit of time

General formula is

CI = P(1 + r )t - P

P = $100.00, r = 10% = 0.1, t = 3 years [Given]

Compound Interest = 100(1 + 0.1)3 - 100

= 100(1.1)3 - 100

By further calculation

=100 × 1.331 - 100

= 133.1 - 100

= 33.1

Therefore, the compound interest is $ 33.1.

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What is the compound interest on a three-year, $100.00 loan at a 10 percent annual interest rate?

Summary:

The compound interest on a three-year, $100.00 loan at a 10 percent annual interest rate is $ 33.1.