Question

Mr Rahim deposits $20 000 in a bank that pays a compound interest of 3.5% p.a. for 6 years. Calculate the final amount, correct to the nearest dollar, that Mr Rahim will have in the bank at the end of the 6 years.​

Answer 1

To calculate the final amount Mr. Rahim will have in the bank at the end of 6 years with compound interest, we can use the formula for compound interest:

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

Where:
A = Final amount (to be calculated)
P = Principal amount (initial deposit) = $20,000
r = Annual interest rate (as a decimal) = 3.5% = 0.035
n = Number of times interest is compounded per year (assuming annually)
t = Number of years = 6

Plugging in the values into the formula:

A = 20000(1 + 0.035/1)^(1*6)
A = 20000(1.035)^6
A ≈ $23,346.78

Therefore, Mr. Rahim will have approximately $23,346.78 in the bank at the end of the 6 years.