Question

3500pounds is placed into a savings account that pays interest at arate of 1.5% compounded annually.

Calculate the total compound amount at the end six years of investment, rounded to 2 decimal places.

Answer 1

$3827.00

Explanation:

To calculate the total compound amount at the end of six years with an interest rate of 1.5% compounded annually, we can use the formula for compound interest:

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

Where:

A = Total compound amount

P = Principal amount (initial investment)

r = Annual interest rate (as a decimal)

n = Number of times interest is compounded per year

t = Number of years

In this case:

P = $3500

r = 1.5% = 0.015 (as a decimal)

n = 1 (compounded annually)

t = 6 years

Substituting these values into the formula, we have:

A = 3500 * (1 + 0.015/1)^(1*6)

Calculating this expression, we get:

A ≈ 3500 * (1.015)^6 ≈ 3500 * 1.093717 ≈ 3827.00

Rounding the total compound amount to 2 decimal places, the final value is approximately $3827.00