Question

We are interest rate compounded annually beginning balance 1000 annual interest rate 8% what will your ending balance be after one year

Answer 1

1080

Step-by-step explanation:

Compound interest involves the reinvesting of interest.

The formula for compound interest is given by:

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

Where P is the principal (i.e the beginning balance),

r is the rate,

n is the number of times it is compounded,

t is the number of years

A is the ending balance.

Given that P = 1000, r = 8% = 0.08, t =1 years and it is compounded annually (i.e n = 1).

Substituting values into the formula and calculating gives:

`A=P(1+(r)/(n) )^(nt)\\A=1000(1+(0.08)/(1) )^(1*1)\\A= 1000(1+0.08)=1000(1.08)\\A=1080`