A loan of $2,000 is taken at an annual interest rate of 5%, compounded annually. What will be the amount after 3 years?

Mon, 04 May 2026 02:56:50 +0000

**A loan of $2,000 is taken at an annual interest rate of 5%, compounded annually. What will be the amount after 3 years?** What’s fascinating—and increasingly common—for many Americans today is how a modest loan of $2,000 can grow with interest, especially when compounded annually at 5%. As borrowing needs shift in a fluctuating economy, understanding how compound interest builds value over time is key. A loan of $2,000 at 5% annual interest compounded annually delivers a clear financial trajectory—one people are actively exploring through trusted finance platforms and mobile tools. The math behind this loan reveals steady growth: starting with $2,000, each year adds interest based on the current balance. After the first year, 5% compounds, growing the principal to $2,100. In year two, interest applies to $2,100, pushing the total to $2,205. By year three, the $2,205 earns 5% interest, resulting in $2,315.05. This compounded growth—where interest earns interest—illustrates how even small amounts can accumulate meaningfully over time, especially within a 12- to 36-month horizon. This type of loan is widely relevant in today’s financial landscape. With rising cost-of-living pressures and fluctuating income expectations, many people seek accessible borrowing options with transparent terms. Compounded interest loans like this attract users searching for clear, predictable returns—or understanding how borrowed capital expands. The annual 5% rate is both relatable and widely applicable, making this a go-to example in personal finance discussions and digital lending platforms across the U.S.