If you put $400 into a bank account today and it promises to pay 5% interest for 6 years, how much is in the account at the end of the six years?
A) $$\$ 400 \times 6 \times ( 1.05 )$$
B)
$$\$ 400 \times ( 1.05 ) ^ { 6 }$$
C)
$$\$ 400 \times ( 1.30 )$$
D)
$$\$ 400 \times \left( 1 + .05 ^ { 6 } \right)$$

Question

Quizplus · Accepted Answer

The formula for calculating the final amount in a bank account with compound interest is given by:

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

Where,

A = Final amount
P = Principal amount (the initial amount you deposit)
r = Annual interest rate (as a decimal)
n = Number of times the interest is compounded per year
t = Number of years

In this case,

P = $400 (the initial deposit)
r = 5% = 0.05 (annual interest rate)
n = 1 (compounded annually)
t = 6 (number of years)

Substituting these values in the formula, we get:

A = $400(1 + 0.05/1)^(1*6)
A = $400(1.05)^6
A = $400(1.3401)
A = $536.04

Therefore, the amount in the account at the end of six years is $536.04.

Choice B is the correct answer.

If You Put $400 into a Bank Account Today and It