Question

What will the balance be if you use compound interest for a 2,000 deposit compound interest compounded annually at 6% for 2 years

Answer 1

$2,247.20

Explanation:

Lets use the compound interest to solve this problem:

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

P = initial balance

r = interest rate (decimal)

n = number of times compounded annually

t = time

First, change 6% into a decimal:

6% ->
`(6)/(100)` -> 0.06

Now, plug the values into the equation:

`A=2,000(1+(0.06)/(1))^(1(2))`

`A=2,247.20`

The balance after 2 years will be $2,247.20