An investor deposit $6100.00 in an investment account
The amount pays 3.1% interest, compounded annually
The investor leaves the money in the account for two years
The investor makes no additional deposits or withdrawals. What is the balance in the account at the end of the two years?
To calculate the balance in the account after two years, we can use the formula for compound interest:
A = P(1 + r)^n
Where:
A = the balance in the account after n years
P = the principal amount (initial deposit)
r = the annual interest rate (in decimal form)
n = the number of years
In this case:
P = $6100.00
r = 3.1% = 0.031
n = 2 years
Plugging in the values:
A = 6100(1 + 0.031)^2
A = 6100(1.031)^2
A = 6100(1.062761)
A = $6486.46
Therefore, the balance in the account at the end of two years would be $6486.46.