Suppose that 9000 is placed in an account that pays 14% interest compounded each year. Assume that no withdrawls are made from the account.

Question

Find the amount after one year. Find the amount after two years.

Thanks! :)

Answer 1

For compound interest, use the formula

A(t) = P(1+r/n)^nt

For this problem, P = 9000, n = 1 and r = 0.14.

A(1) = 9000(1+0.14/1)⁽¹⁾⁽¹⁾ = 90000(1.14) = 9900

A(2) = 9000(1+0.14)² = 9000(1.2996) = 11696.40