Question

If you save $3,000 at an interest rate of

14 percent per year, how much will you have at the end of six years?
A. $5,805.96
B. $6,502.34
C. $6,584.91

Answer 1

Answer: Option 'C' is correct.

Explanation:

Since we have given that

Principal amount = $3000

Rate of interest = 14%

Time period = 6 years

As we know the formula for "Compound Interest " :

`Amount=P(1+(R)/(100))^n\\\\Amount=3000(1+(14)/(100))^6\\\\Amount=3000(1+0.14)^6\\\\Amount=3000(1.14)^6\\\\Amount=3000* 2.194\\\\Amount=\$6584.91`

Hence, Option 'C' is correct.

Answer 2

Amount earned in compound interest = P(1 + r)^n; where P is the principal, r is the rate and n is the number of periods.

Amount = 3,000(1 + 14%)^6 = 3,000(1 + 0.14)^6 = 3,000(1.14)^6 = $6,584.91