Question

What will the balance be if you use compound interest for a 2,000 deposit compound interest compounded annually at 6% for 2 years

Answer 1

Answer:

$2,247.20

Step-by-step explanation:

Lets use the compound interest to solve this problem:

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

P = initial balance

r = interest rate (decimal)

n = number of times compounded annually

t = time

First, change 6% into a decimal:

6% -> $\frac{6}{100}$ -> 0.06

Now, plug the values into the equation:

$A=2,000(1+\frac{0.06}{1})^{1(2)}$

$A=2,247.20$

The balance after 2 years will be $2,247.20