Question

Molly invested $12,000 in an account with an interest rate of 6%. What is the amount in Molly's account after 6 years if the interest was compounded annually?A) $5,022.23B) $17,022.23C) $22,044.46D) $170,222.26

Answer 1

B. using the formula for interest rate would come out to 17,022

Answer 2

Principal = $ 12,000

Rate of interest = 6% = 0.06

Time in years = t = 6 yrs

Amount =
`P(1+r)^(t)`

Amount = 12,000
`(1+0.06)^(6)`

Amount = 12,000
`(1.06)^(6)`

Amount = 12,000(1.418519112256)

Amount = $ 17022.2293

Interest = Amount - Principal

Interest = 17,022.2293 - 12,000

Interest = $5022.2293

Interest = $ 5022.23

Option A is the answer