According to the compound interest formula, $500 invested today at a 6-percent annual rate of interest two years from now will amount to (the nearest dollar):

Question

Quizplus · Accepted Answer

The compound interest formula is A = P(1 + 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. Here, P = $500, r = 6% or 0.06, n = 1 (compounded annually), and t = 2 years. Plugging these values into the formula gives A = 500(1 + 0.06/1)^(1*2) = 500(1.06)^2 = 500 * 1.1236 = $562 (to the nearest dollar).

According to the Compound Interest Formula, $500 Invested Today at a 6-Percent