Question

We are interest rate compounded annually beginning balance 1000 annual interest rate 8% what will your ending balance be after one year

Answer 1

Answer:

1080

Explanation:

Compound interest involves the reinvesting of interest.

The formula for compound interest is given by:

$A=P(1+\frac{r}{n} )^{nt}$

Where P is the principal (i.e the beginning balance),

r is the rate,

n is the number of times it is compounded,

t is the number of years

A is the ending balance.

Given that P = 1000, r = 8% = 0.08, t =1 years and it is compounded annually (i.e n = 1).

Substituting values into the formula and calculating gives:

$A=P(1+\frac{r}{n} )^{nt}\\A=1000(1+\frac{0.08}{1} )^{1*1}\\A= 1000(1+0.08)=1000(1.08)\\A=1080$