Question

how much would $200 invested at 6% interest compounded annually be worth after 5 years? round your answer to the nearest cent.

Answer 1

Formula for compound interest

Amount, A = P(1 + r)ⁿ

P= Principal = $200, r = rate = 6% = 0.06, n = number of years = 5

Amount, A = 200(1 + 0.06)⁵

= 200*(1.06)⁵

= 267.645..

So it would be worth ≈ $267.65 after 5 years of compounding.

Answer 2

`F=P(1+(r)/(n))^(nt)`
F = future amount (what you're looking for)
P = present amount = 200
r = interest rate = 0.06
n = number of compoundings a year = 1
t = number of years = 5

`F=200(1+(0.06)/(1))^(1\cdot 5)`
F = $267.65