Lexi opened a savings account and deposited $600.00 as principal. The account earns 14% interest, compounded annually. What is the balance 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.
Using the formula A = P(1 + 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:
P = $600.00
r = 14% = 0.14
n = 1 (compounded annually)
t = 6 years
A = 600(1 + 0.14/1)^(1 * 6)
A = 600(1 + 0.14)^6
A = 600(1 + 0.14)^6
A ≈ 600(1.14)^6
A ≈ 600(1.974293)
A ≈ 1184.57
Rounded to the nearest cent, the balance after 6 years is $1184.57.