Question

James invests 20k in an account that offers a compound interest rate of 8.3% per year for 6 years. I need to know which one is the correct answer 1. a(6)=20,000×(1+0.83)⁶‐¹2. a(6)=20,000×(1+0.083)⁶+¹3. a(6)=20,000×(1+0.083)⁶‐¹4. a(6)=20,000×(1+0.083)⁶

Answer 1

Given,

The principal amount is 20k.

The rate of interest is 8.3%.

The time period is 6 Years.

Required

The amount of investment after 6 years.

The amount is calculated as,

$\begin{gathered} Amount=principal\times(1+\frac{rate}{100})^{time} \\ =20000\times(1+\frac{8.3}{1000})^6 \\ =20000\times(1+0.083)^6 \\ =20000\times(1+0.083)^6 \end{gathered}$

Hence, the amount after 6 years is 2000 x (1 + 0.083)^6.