If you place $100 in a bank account that pays 6% at the end of each year,and you leave your $100 and all your interest in the bank,how much will you have in the bank at the end of seven years with annual compounding?
A) (106)⁷.
B) 7 ∗ (106).
C) 100 ∗ (1.60)⁷.
D) 100 ∗ (1.06)⁷.

Question

Quizplus · Accepted Answer

The formula for compound interest is A = P(1 + r/n)^(nt), where:
A = the final amount
P = the principal (initial amount)
r = the annual interest rate (as a decimal)
n = the number of times the interest compounds per year
t = the number of years

In this case, P = $100, r = 0.06 (6%), n = 1 (compounding annually), and t = 7. 
Using the formula, we get:
A = 100(1 + 0.06/1)^(1*7)
A = 100(1.06)^7
A = $191.02
Therefore, the best choice is D, as it gives the correct formula for calculating the final amount after 7 years of compounding.

If You Place $100 in a Bank Account That Pays