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

1 Answer
Mar 31, 2018

Answer:

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#