54.9k views
5 votes
Actually calculate the final amount on $1000 compounded annually at 6% per year for 4 years.

User Paulmey
by
7.3k points

1 Answer

3 votes

Answer: the final amount is $1262.5

Explanation:

Initial amount in the account is $1000 This means that the principal is

P = 1000

It was compounded annually. This means that it was compounded once in a year. So

n = 1

The rate at which the principal was compounded is 6%. So

r = 6/100 = 0.06

It was compounded for 4 years. So

t = 4

The formula for compound interest is

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

A = total amount in the account at the end of t years. Therefore

A = 1000 (1 + 0.06/1)^1×4

A = 1000(1.06)^4 = $1262.5

User Gahl Levy
by
8.3k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories