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$1000 in a savings bond on the day you were born. The bond pays 6% interest compounded annually. How much is it worth in 18 yrs?

I know it earns $60 a yr. but I am lost after that.

1 answer

P = Po(1+r)^n.

r = 6% / 100% = 0.06 = Annual % rate expressed as a decimal.

n = 1comp./yr * 18yrs = 18 compounding
periods.

P = 1000(1.06)^18 = $2854.34

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