If $7,800 is depostied into an account paying 6% interest compounded annually ( at the end of each year), how much money is in the account after 2 years?
How would I set this up?
Use the formula at this site:
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I did not understand that!
To calculate the amount of money in the account after 2 years, you can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future amount
P = the principal amount (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 (P) is $7,800, the annual interest rate (r) is 6% or 0.06 (as a decimal), the interest is compounded annually (n = 1), and the number of years (t) is 2.
Plugging in the given values into the formula:
A = 7800(1 + 0.06/1)^(1*2)
A = 7800(1 + 0.06)^2
A = 7800(1.06)^2
A = 7800(1.1236)
A ≈ $8,761.28
Therefore, after 2 years, there would be approximately $8,761.28 in the account.