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?

Question

Quizplus · Accepted Answer

Using the formula for compound interest, we have:

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

where A is the amount in the account after time t, P is the principal (initial amount), r is the annual interest rate as a decimal (5% = 0.05), n is the number of times the interest is compounded per year (assume once a year), and t is the time in years.

Plugging in the values, we get:

A = 400(1 + 0.05/1)^(1*6)
A = 400(1.05)^6
A ≈ $553.68

Therefore, the amount in the account at the end of six years is approximately $553.68, which is closest to choice B).

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