You take out a loan for $780 at an interest rate of 8% compounded annually for six years. What is the total amount that you will have at the end of the six years?

Answer 1

To calculate the total amount you will have at the end of the six years, we need to use the formula for compound interest:

A = P(1 + r/n)^(nt)

Where:
A = the total amount
P = the principal amount (initial loan amount)
r = the annual interest rate (in decimal form)
n = the number of times the interest is compounded per year
t = the number of years

Given:
P = $780
r = 8% or 0.08
n = 1 (interest is compounded annually)
t = 6 years

Plugging in the values:

A = $780(1 + 0.08/1)^(1*6)
A = $780(1 + 0.08)^6
A = $780(1.08)^6
A = $780(1.586874018) (rounded to 9 decimal places)
A = $1230.87

Therefore, at the end of six years, you will have approximately $1230.87.