You invested $1000 in a savings account in 6th grade. The account pays 5% annual interest. How much money will be in the account after 6 years? I understand how to set the equation up, but I'm not sure how to get the final answer. This is a question from my textbook that shows all the steps and the answer, but I can't figure out how they got a final answer of $1340.10. Please Help Me Understand This!!
done, see your previous post
To calculate the final amount in the savings account after 6 years, you can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A is the final amount in the account
P is the initial principal (the amount you invested)
r is the annual interest rate (expressed as a decimal)
n is the number of times that interest is compounded per year
t is the number of years
In this case, you invested $1000 (P) with an annual interest rate of 5% (r = 0.05), and the interest is compounded once per year (n = 1) over 6 years (t = 6). Plugging these values into the formula gives us:
A = 1000(1 + 0.05/1)^(1*6)
A = 1000(1 + 0.05)^6
A = 1000(1.05)^6
A ≈ 1000(1.3401)
Calculating this expression gives us approximately $1340.10.
Therefore, the final amount in the account after 6 years would be $1340.10.