Question

On a deposit of $2,500 that earns 1% compound interest (compounded annually), how much will you have after 6 years?

A. $2,650.00
B. $2,653.80
C. $3,546.30
D. $4,428.90

Answer 1

To calculate the amount of money you will have after 6 years with compound interest, use the formula A = P(1 + r/n)^(nt). Plugging in the given values, the answer is approximately $2,653.76.

Step-by-step explanation:

To calculate the amount of money you will have after 6 years with compound interest, you can use the formula:

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

• A is the final amount
• P is the principal amount (initial deposit)
• r is the annual interest rate (expressed as a decimal)
• n is the number of times the interest is compounded per year
• t is the number of years

Plugging the given values into the formula:

A = $2,500(1 + 0.01/1)^(1*6)

A = $2,500(1 + 0.01)^6

A = $2,500(1.01)^6

A ≈ $2,653.76

Therefore, you will have approximately $2,653.76 after 6 years.