Question

$6000 are invested in a bank account at an interest rate of 10 percent per year.

Answer 1

The amount for the investment of $6000 will be a.$6369  b. $6090  and c.$6030.

What is compound interest?

Compound interest is the interest levied on the interest. The formula for the calculation of compound interest is given as:-

$A=P[1+\dfrac{r}{n}]^{nt}$

a) The amount in the bank after 6 years if interest is compounded annually.

$A=P[1+\dfrac{r}{1}]^{t}\\\\\\A=6000[1+\dfrac{0.01}{1}]^{ 6}$

A= $6369

b) The amount in the bank after 6 years if interest is compounded quarterly.

$A=P[1+\dfrac{r}{4}]^{4t}\\\\\\A=6000[1+\dfrac{0.01}{4}]^{4\times 6}$

A= $6090

c ) The amount in the bank after 6 years if interest is compounded monthly.

$A=P[1+\dfrac{r}{12}]^{4t}\\\\\\A=6000[1+\dfrac{0.01}{12}]^{12\times 6}$

A=$6030

Hence the amount for the investment of $6000 will be a.$6369  b. $6090  and c.$6030.

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