Question

if $3,000 is invested in a bank account at an interest rate of 6 percent per year find the amount in the bank after 10 years if interest is compounded annually

Answer 1

We have the following:

$A(t)=P(1+r)^t$

replacing:

A is the amount

P is the principal 3000

r is the interest rate (decimal), 0.06

t is the time, 10 years

$\begin{gathered} A(10)=3000\cdot(1+0.06)^{10} \\ A(10)=3000\cdot(1.06)^{10} \\ A(10)=5372.54 \end{gathered}$

Therefore the amount is $5372.54