Jamarcus starts with $1,200 in a college savings account. His account earns interest at a rate of 1.8% compounded annually. How much money is in the account after 6 years?
Mathematics · High School · Thu Feb 04 2021
Answered on
Given:
Principal Amount ( P ) = $1200
Interes Rate ( r ) = 1.8% or 0.018 ( divide by 100)
Term ( t ) = 6
Compounded annually ( n ) = 1
Formula for Compound Interest:
A = P ( 1 + r/n)^nt
A = Future value
Solution:
Substitute the given values of P, r, n and t to the formula for the compound interest.
A = $1200 ( 1 + 0.018/1)^(6)(1)
A = $1200 ( 1.018)^6
A = $1200 ( 1.112978226)
A = $1,335.57
Final answer:
A = $1,335.57