Question

Your deposit $1500 into a savings account that pays 6% interest compounded yearly. How much money is in the account after 10 years assuming you made no additional deposits or withdrawals

Answer 1

$2686.27.

Explanation:

The formula for the amount of money after compound interest is

`A=P(1+(r)/(n) )^(nt)`

where P is the principal, r is the rate, n is the number of times the interest is compounded per year, and t is the number of years. $1500 is the principal amount of money. 6% in decimal form is 0.06 (divided by 100), so the rate is 0.06. The interest is compounded once per year, so n = 1. And it's after 10 years, so t = 10. So now we can substitute:

`A=1500(1+(0.06)/(1) )^(1(10))`

`A=1500(1+0.06)^(10)`

`A=1500(1.06)^(10)`

`A=2686.27`