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How much would $400 be worth after 6 years, if it were invested at 2%interest compounded annually? (Use the formula below and round youranswer to the nearest cent.)

How much would $400 be worth after 6 years, if it were invested at 2%interest compounded-example-1
User FPGA
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1 Answer

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13 votes

Solution

The formula to use is


A(t)=P(1+(r)/(n))^(nt)

From the question, we have


\begin{gathered} P=\text{ \$}400 \\ \\ t=6\text{ }years \\ \\ r=2\text{ \%} \\ \\ r=0.02 \\ \\ n=1 \end{gathered}

Using the parameters, we have


\begin{gathered} A(t)=P(1+(r)/(n))^(nt) \\ \\ A(t)=400(1+(0.02)/(1))^6 \\ \\ A(t)=400(1.02)^6 \\ \\ A(t)=\text{ \$}450.46 \end{gathered}

The answer is

How much would $400 be worth after 6 years, if it were invested at 2%interest compounded-example-1
User Tastyminerals
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