Question

Fill in the missing words

Lex has opened a savings account with $1,200. His account has an annual interest rate of 6.8%
compounded annually. How much money will Lex have after 6 years?

Answer 1

• $1780.77

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Use the formula for compound interest :

• 
  `A = P(1 + r/n)^(nt)`

Where:

• A = the future value'
• P = the principal investment amount,
• r = the annual interest rate,
• n = the number of compounds,
• t = the number of years.

In this problem, we have:

• P = $1,200, r = 6.8% = 0.068, n = 1, t = 6

Now, let's plug these values into the formula:

• 
  `A = 1200(1 + 0.068/1)^(1*6) = 1200(1 + 0.068)^6 = 1200(1.068)^6 = 1780.77`

After 6 years, Lex will have approximately $1780.77 in his savings account.