Jack has $500 to invest. The bank offers an interest rate of 6% compounded annually. How much money will Jack haveafter 1 year? 2 years? 5 years? 10 years?
Accepted Solution
A:
Answer with explanation:The formula to calculate the compound amount is given by :-[tex]A=P(1+r)^t[/tex], where P is the Principal amount invested , r is the rate of interest ( in decimal ), and t is the time period ( in years).As per given , we haveP= $500 , r= 6%=0.06Then the formula to find the compound amount after t years : [tex]A=500(1.06)^t[/tex] (Put values of P and r in the formula)For t=1 [tex]A=500(1.06)^1=530[/tex] Jack will have $530 after 1 year.For t=2 [tex]A=500(1.06)^2=561.8[/tex] Jack will have $561.8 after 2 years.For t=5[tex]A=500(1.06)^{5}=669.1127888\approx669.11[/tex] Jack will have $669.11 after 5 years.For t=10[tex]A=500(1.06)^{10}=895.423848271\approx895.42[/tex] Jack will have $895.42 after 10 years.