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Suppose Carol Danvers invested $1,000 into an account paying 6% annual interest compounded

annually.

How much is in her account at the end of one year?

1 Answer

5 votes

Answer:

$ 1,060.00

Explanation:

A = $ 1,060.00

A = P + I where

P (principal) = $ 1,000.00

I (interest) = $ 60.00

Compound Interest Equation

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

Where:

A = Accrued Amount (principal + interest)

P = Principal Amount

I = Interest Amount

R = Annual Nominal Interest Rate in percent

r = Annual Nominal Interest Rate as a decimal

r = R/100

t = Time Involved in years, 0.5 years is calculated as 6 months, etc.

n = number of compounding periods per unit t; at the END of each period

Suppose Carol Danvers invested $1,000 into an account paying 6% annual interest compounded-example-1
User Longfei Wu
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