Question

kara opened a savings account with $8,000. she makes no changes to this account after 2 years. her account has a compound interest rate of 6% per year, compound annually. what will be the total amount in the account at the end of two years?

Answer 1

To find the total amount in Kara's savings account at the end of two years, we can use the formula for compound interest. Based on the given information, the total amount will be approximately $8,992.64.

Step-by-step explanation:

To find the total amount in Kara's savings account at the end of two years, we can use the formula for compound interest:

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

Where:

• A is the total amount in the account
• P is the principal amount (initial deposit)
• r is the annual interest rate (expressed as a decimal)
• n is the number of times the interest is compounded per year
• t is the number of years the money is invested

Based on the information given, we have:

• P = $8,000
• r = 6% = 0.06 (expressed as a decimal)
• n = 1
• t = 2

Plugging these values into the formula, we get:

A = 8000(1 + 0.06/1)^(1*2)

Calculating this, we find that the total amount in Kara's account at the end of two years will be approximately $8,992.64.