Question

Calculate the compound interest.

How much would $400
invested at 5% interest
compounded annually be
worth after 6 years?

Formulas:

Compound Interest: A(t) = P(1+r/n)^nt

Continuously Compound Interest: A(t) = P•e^rt

Answer 1

You use the first formula. You plug in the values to get A=400(1+(0.05/1))^6. You should get approximately $536.04. I used 0.05 because you need to change the percent to a decimal, and 1 for n because it is compounded annually, meaning once a year.