Ed puts $600.00 into an account to use for school expenses. The account earns 7% interest, compounded annually. How much will be in the account after 6 years?
Use the formula A=P1+
r
n
nt, where A is the balance (final amount), P is the principal (starting amount), r is the interest rate expressed as a decimal, n is the number of times per year that the interest is compounded, and t is the time in years.
Round your answer to the nearest cent.
To solve this, we need to use the formula A = P(1 + r/n)^(nt).
P = $600.00
r = 7% = 0.07 (expressed as a decimal)
n = 1 (interest is compounded annually)
t = 6 years
A = 600(1 + 0.07/1)^(1*6)
A = 600(1 + 0.07)^6
A = 600(1.07)^6
A ≈ 600(1.402551)
A ≈ $841.53
Therefore, there will be approximately $841.53 in the account after 6 years.