Question

A loan is borrowed for $1200 for 2 years at a compound interest of 6%. Interest is compounded annually. What is the compound amount?

Answer 1

The formula of compound interest is
A=p (1+r)^t
A future value?
P present value 1200
R interest rate 0.06
T time 2 years

A=1,200×(1+0.06)^(2)
A=1,348.32

Answer 2

A = 1200(1 + 0.06)^2= 1348.32