Problema Solution
if you put $6,000.00 in a savings account that pays interest at the rate of 4 percent, compounded annually, how much will you have in five years
Answer provided by our tutors
P = $6,000 the principle or present value
r = 0.04 or 4% the annual rate
t = 5 years the number of years (equal to the number of compounding periods)
A = the future value or the money that will accumulate
A = P(1 + r)^t
A = 6000(1 + 0.04)^5
by solving we find:
A = $7,299.92
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in 5 years there will be $7,299.92 in the saving account.