If $7,800 is deposited into an account paying 6% interest compounded annually at the end of each year, how much money is in the account after 2 years?
Multiply $7800 by 1.06, TWICE (once for each year). That will give you the answer.
Doing the calculation yourself will be a good exercise.
To solve this problem, we need to use the formula for compound interest:
A = P (1 + r/n)^(nt)
Where:
A = the final amount (or balance) in the account
P = the principal amount (or initial deposit)
r = the annual interest rate (as a decimal)
n = the number of times interest is compounded per year
t = the number of years
In this case, the principal amount, P, is $7,800, the annual interest rate, r, is 6% (or 0.06 as a decimal), interest is compounded annually (n = 1), and we want to know the balance after 2 years. So, we have:
A = 7800(1 + 0.06/1)^(1*2)
Now, let's calculate the amount:
A = 7800(1 + 0.06)^2
A = 7800(1.06)^2
A = 7800(1.1236)
A ≈ $8,765.68
Therefore, the amount in the account after 2 years would be approximately $8,765.68.