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a bank account principal is $1,000 and accumulate yearly interest at 6%. assuming that no withdrawals are made, use the compound interest formula to compute the amount in the account after 10 yearsIf interest is compounded yearly, what is the amount of money after t = 10 years?

Sagot :

The rule of the compounded interest is

[tex]A=P(1+\frac{r}{n})^{nt}[/tex]

A is the new amount

P is the initial amount

r is the rate in decimal

n is the number of periods per year

t is the time in years

Since the principal is $1000, then

P = 1000

Since the yearly interest rate is 6%, then change it to decimal by dividing it by 100

r = 6/100 = 0.06

Since the interest is compounded yearly, then

n = 1

Since the time is 10 years, then

t = 10

Substitute them in the rule above

[tex]\begin{gathered} A=1000(1+\frac{0.06}{1})^{(1)(10)} \\ A=1000(1.06)^{10} \\ A=1790.847697 \end{gathered}[/tex]

The amount of money in the account after 10 years is $1790.847697

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