What is the compound interest for a $200 principal invested for 6 years at an interest rate of 9%?

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Jan 25, 2018

Answer:

Amount (Principal Amount + Interest) = #color(blue)($335.42)#

Your deposit $200 pays 9 percent interest (0.09) annually.

At the end of 6 years, your balance will have grown to $335.42.

Explanation:

Given:

[ P ] Principal Amount (Initial Deposit) = #color(green)(" "$500.00)#

[ r ] Rate of Interest = #color(green)(" "9/100 rArr 0.09)#

[ t ] Period (in Years) = #color(green)(" "6)#

[ n ] Number of times the interest is compounded/year = #color(green)(" "1#

I am assuming that the interest is compounded once annually.

We must now find

[ A ] Amount accumulated after "n" years, including interest and also the Compound Interest earned/paid

We will use the following formula to find Amount [ A ]

Amount [ A ]# color(blue)(= P[1+(r/n)]^(nt)#

Using the values given in the problem, we get

Amount = #200[1+(0.09/1)]^(1*6#

#rArr 200*(1.09)^6#

#~~200*1.677#

#~~335.4200#

#~~335.42#

Hence, if your deposit of $200 pays 9 percent interest (0.09) annually, and you keep the deposit for 6 years, at the end of six years, your balance will have grown to $335.42.

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