Question

Nathan put $200 in a savings account for two years. The interest rate is 5% and will be compounded annually. How much money will he have at the end of the two years?

Answer 1

Answer:

Nathan will have $220.5 at the end of the two years.

Step-by-step explanation:

We are given the following in the question:

P = $200

r = 5% = 0.05

t = 2 years

The compound interest is given by:

$A = p\bigg(1+\dfrac{r}{n}\bigg)^{nt}$

where A is the amount, p is the principal, r is the interest rate, t is the time in years and n is the nature of compound interest.

Putting values, we get,

For n = 1

$A = 200\bigg(1+\dfrac{0.05}{1}\bigg)^2\\\\A = \ 220.5$

Thus, Nathan will have $220.5 at the end of the two years.