Question

How much money will you have after 12 years if you deposit $1200 into an account that earns 6.5% annual interest compounded daily?

Answer 1

Given:

Deposit amount = $1200

Time = 12 years

Interest rate = 6.5%

Find -:

Amount after 12 years

Explanation-:

Compounded interest formula:

$A=P(1+\frac{r}{n})^{nt}$

Where,

$\begin{gathered} A=\text{ Final amount} \\ \\ P=\text{ Initial principal balance } \\ \\ r=\text{ Interest rate} \\ \\ n=\text{ Number of times interest applied per time period} \\ \\ t=\text{ Time} \end{gathered}$

The final amount is:

$\begin{gathered} A=P(1+\frac{r}{n})^{nt} \\ \\ A=1200(1+\frac{6.5}{100})^{12} \\ \\ A=1200(1+0.065)^{12} \\ \\ \end{gathered}$

The amount after 12 years:

$\begin{gathered} A=1200(1.065)^{12} \\ \\ A=1200\times2.1291 \\ \\ A=2554.92 \end{gathered}$

The amount after 12 years is $2554.92