Molly deposits $200 in a savings account that has a 20% interest rate compounded annually. What will be her total after 3 years?
200 (1 + .20)^3
To calculate the total amount after 3 years, we need to use the formula for compound interest:
A = P (1 + r/n)^(nt)
Where:
A = the future amount
P = the principal amount (initial deposit)
r = annual interest rate (expressed as a decimal)
n = number of times the interest is compounded per year
t = number of years
In this case:
P = $200
r = 20% = 0.20 (expressed as a decimal)
n = 1 (compounded annually)
t = 3 years
We can plug in these values into the formula and calculate the total amount:
A = 200(1 + 0.20/1)^(1*3)
A = 200(1 + 0.20)^3
A = 200(1.20)^3
A = 200(1.728)
A = $345.60
So, after 3 years, Molly will have a total of $345.60 in her savings account.