Question

Jack has $500 to invest. The bank offers an interest rate of 6% compounded annually. How much money will Jack have

Answer 1

Answer with explanation:

The formula to calculate the compound amount is given by :-

$A=P(1+r)^t$, where P is the Principal amount invested , r is the rate of interest ( in decimal ), and t is the time period ( in years).

As per given , we have

P= $500  ,  r= 6%=0.06

Then the formula to find the compound amount after t years :

$A=500(1.06)^t$  (Put values of P and r in the formula)

For t=1

$A=500(1.06)^1=530$  

Jack will have $530 after 1 year.

For t=2

$A=500(1.06)^2=561.8$  

Jack will have $561.8 after 2 years.

For t=5

$A=500(1.06)^{5}=669.1127888\approx669.11$  

Jack will have $669.11 after 5 years.

For t=10

$A=500(1.06)^{10}=895.423848271\approx895.42$  

Jack will have $895.42 after 10 years.