Question

You invest $1,000 in an account with 6 % interest, compounded annually. Assume you do not touch the money or add money other than the earned interest.

How much money will you have in the account after 10 years?
(A) $ 1790.85
(B) $ 109951.16
(C) $ 538.62
(D) $ 1600

Answer 1

A) 1790.85

Explanation:

Hi there!

In order to solve this problem, you’ll need to use the compound interest formula
`x = p(1 + (r)/(n) )^n^t`

p will be your principle, or starting amount, which is 1,000.

r will be your percentage, which is 0.06.

n will be the amount of times interest is compounded, since this question says compounded anually, your compound will be 1.

t is the time in years it is compounded, which is 10.

When the numbers are plugged in, we get
`x = 1,000(1 + (0.06)/(1))^1^0`

When we solve for this, we get 1790.85.

Hope this helps! :)