Question

Bank B offers Tyler 3% interest compounded annually. How much would Tyler’s investment be worth after 6 years in this account? Show your calculations below.
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Answer 1

Answer:

$1194.05

Step-by-step explanation:

Missing sentence: Tyler has $1000 that he wants to put in a savings account.

Use the formula for amount after compound interest.

$A = P(1+i)^{n}$

To calculate "i"   $i = r/c$

To calculate "n"   $n = t*c$

Meaning of each variable:

"A" for amount of money after the time period

"P" for principal, or starting money

"i" for interest rate per compounding period

"n" for number of compounding periods

"t" for time, usually in years

"c" for compounding period (annual = 1; semi-annual = 2 etc...)

Combined, the formula can also be:

$A = P(1+\frac{r}{c})^{t*c}$

What we know:

P = 1000

r = 3%, or 0.03 in decimal form

t = 6 years

c = 1

Substitute into formula:

$A = P(1+\frac{r}{c})^{t*c}$

$A = 1000(1+\frac{0.03}{1})^{6*1}$      Simplify

$A = 1000(1.03)^{6}$               Do exponent first

$A = 1000(1.19405229653)$            Multiply

$A = 1194.05229653$            Unrounded answer

A ≈ 1194.05               Round to two decimals for money

Tyler's investment will be worst $1194.05.

Answer 2

Answer:

$1194.05 is the answer!