On your birthday, you deposit $540.00 in an account that pays 6% interest, compounded annually. How much is in the account 3 years later?
1 Answer
$540 is the amount of money deposited in the account
And the balance of the account which is $540 has a 6% increase once a year for 3 years.
6% interest means 6% of 540 is added once a year.
We have to convert the interest into a decimal, divide whatever the percentage is by 100.
Now we are working with the numbers we need, use multiplication to find 6% of 540.
In just one year, the amount earned in interest is
The balance of the account after 3 years will be
Algebraically, the question can be answered this way
Let
Let
Let
Let
You can use any letter to represent the numbers but make sure the final equation leads to the right solution.