Final answer:
When you put $1000 into an account with a 20% interest rate, compounded once per year, you will have $1200 at the end of the year. This is calculated using the simplified compound interest formula A = P(1 + r) since the interest compounds annually.
Step-by-step explanation:
If you put $1000 into an account with a 20% interest rate, and interest is compounded once per year, you can calculate the amount of money you will have at the end of the year by using the formula for compound interest:
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.
Since interest is compounded once per year (n=1) and the money is invested for 1 year (t=1), the formula simplifies to:
A = P(1 + r)
Plugging in the values:
A = $1000(1 + 0.20)
A = $1000(1.20)
A = $1200
Therefore, at the end of one year, you will have $1200 in the account. The correct answer is B. $1200.