Question

If you save $3,000 at an interest rate of 14 percent per year, how much will you have at the end of six years? The interest should be compounded.

a) $55,805.96
b) $56,502.34
c) $56,584.91
d) $57,000.00

Answer 1

After calculating the compounded interest using the appropriate formula, it is determined that $3,000 saved at a 14% annual interest rate compounded yearly will amount to $6,092.57 after six years. None of the provided answers match this correct amount.

Step-by-step explanation:

To determine how much you will have at the end of six years when you save $3,000 at an interest rate of 14 percent per year, compounded annually, you can use the compound interest formula:

A = P(1 + r/n)nt

Where:

• A is the amount of money accumulated after n years, including interest.
• P is the principal amount (the initial amount of money).
• r is the annual interest rate (decimal).
• n is the number of times that interest is compounded per year.
• t is the time the money is invested for in years.

For your question:

• P = $3,000
• r = 14% or 0.14
• n = 1 (since it is compounded annually)
• t = 6 years

Now, we substitute these values into the formula:

A = 3000(1 + 0.14/1)1*6

A = 3000(1 + 0.14)6

A = 3000(1.14)6

A = 3000 * 2.030856

A = $6,092.57 (rounded to two decimal places)

Therefore, none of the options given match the correct answer, as $6,092.57 is not one of the choices provided.