A = 1000(1 + 0.05/1)^{1 \times 3} = 1000(1.05)^3

Wed, 06 May 2026 09:38:24 +0000

# Understanding Compound Interest: How $1,000 Grows to $1,157.63 Using the Formula A = 1000(1 + 0.05)^3 Investing or saving money is more powerful than many realize—especially when time and compound interest work in your favor. One of the most common calculations in finance is determining future value with compound interest. Let’s break down the formula:
A = 1000(1 + 0.05)^3 This expression calculates how a $1,000 investment grows over 3 years at an annual interest rate of 5%, compounded annually. ## What Does Each Part of the Formula Mean?