Use values from the compound interest table to find the compound amount. Round to the nearest cent.
-$200 at 6% compounded annually for 15 years

Question

Use values from the compound interest table to find the compound amount. Round to the nearest cent. 
-$200 at 6% compounded annually for 15 years

Quizplus · Accepted Answer

The formula for compound interest is $A = P(1 + \frac{r}{n})^{nt}$, where $A$ is the amount of money accumulated after n years, including interest, $P$ is the principal amount (the initial amount of money), $r$ is the annual interest rate (decimal), $n$ is the number of times that interest is compounded per year, and $t$ is the time the money is invested for in years. For this problem, $P = 200$, $r = 0.06$ (6% as a decimal), $n = 1$ (since it's compounded annually), and $t = 15$. Plugging these values into the formula gives $A = 200(1 + \frac{0.06}{1})^{1*15} = 200(1.06)^{15} = 479.31$.

Use Values from the Compound Interest Table to Find the Compound