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

Solution:

Compound interest is the interest paid on both principal and interest, compounded in regular intervals.

The formula for Compound interest is: 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' represents the number of times the interest is compounded per unit of time.

The general format:  CI = P(1 + r )^t - P

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

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

= 100(1.1)³ - 100

=100 × 1.331 - 100

= 133.1 - 100

= 33.1

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

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