Question

Carmen deposited $6,000 into a savings account that earns 2.8% interest compounded annually. How much will she have in her account (total) at the end of 3 years?

Answer 1

To help Carmen find the total after 3 years

We'll have to use the annual compound interest formula: A = P(1 + r)ⁿ

A = Final balance (?)

P = Principal balance (6000)

r = Rate (0.028)

n = years (3)

A = 6000(1 + 0.028)³

A = 6000(1.028)³

A = 6000(1.086373952)

A = 6518.243712

Round that to the nearest cent, and we get $6,518.24 as the answer.