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

We can use the compound interest formula:

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

where:
A = the ending amount
P = the principal (starting amount)
r = the annual interest rate (as a decimal)
n = the number of times the interest is compounded per year
t = the number of years

In this case, we have:

P = $100
r = 6% = 0.06
n = 1 (annual compounding)
t = 7 years

Plugging in these values, we get:

A = 100(1 + 0.06/1)^(1*7)
A = 100(1.06)^7
A = 100(1.5036)
A = $150.36

Therefore, after 7 years of annual compounding at 6%, you'll have $150.36 in the bank. Choice D is the closest answer.

If You Place $100 in a Bank Account That Pays