Question

Suppose you deposit $400 in a savings account. If the interest rate is 5% per year, what is the interest earned in six years?

Answer 1

536 usd

Explanation:

This would be an compound interest. Meaning that your gain every year would increase exponentially.
The equation to calculate this would be:

`K_n = K_0 * (1+ p/100)^n`

• `K_n` is your savings after the period `n`
• `K_0` is your starting deposit
• `p` is the percentage
• `n` is the period of interest

for your example we would have.

`K_n= 400 * (1+5/100)^6`