The formula to calculate compound interest is:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (initial deposit or loan amount)
r = annual interest rate (in decimal form)
n = number of times that interest is compounded per year
t = number of years the money is invested or borrowed for
Given:
P = $4000
r = 6% or 0.06
n = 1 (compounded annually)
t = 5 years
Plugging these values into the formula:
A = 4000(1 + 0.06/1)^(1*5)
A = 4000(1 + 0.06)^5
A = 4000(1.06)^5
A = 4000(1.3382255776)
A = $5,352.90
So, the balance in the account after 5 years would be $5,352.90.
Find the balance in the account after the given period.
4000 principal earning 6% compounded annually, after 5 yr
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