Question

How much compound interest will an account of $12,000 bear after 6 years at 3.2% APR, compounded annually? (Hint: Use the formula for annual compound interest.) $2,496.38 $14,496.38 $1,896.38 $496.38 SAVE AND EXIT

Answer 1

$14,496.38


The formula for compound interest is
A = P(1 + r/n)^tn
where
A = Amount after interest
P = Amount of principle
r = interest rate
n = number of periods per year
t = number of years
So let's substitute the known values and solve:
A = P(1 + r/n)^tn
A = 12000(1 + 0.032/1)^(6*1)
A = 12000(1.032)^6
A = 12000(1.208031291)
A = 14496.38 So the answer is $14,496.38