Question

Suppose your​ friend's parents invest $20,000 in an account paying 4% compounded annually. What will the balance be after 6 ​years?

Answer 1

You want to calculate the interest on $20000 at 4% interest per year after 6 year(s).The formula we'll use for this is the simple interest formula, or: Where:
P is the principal amount, $20000.00.
r is the interest rate, 4% per year, or in decimal form, 4/100=0.04.
t is the time involved, 6....year(s) time periods.
So, t is 6....year time periods.
To find the simple interest, we multiply 20000 × 0.04 × 6 to get that: The interest is: $4800.00

Answer 2

$150,000 is the balance in 6 years.