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15 November, 15:16

How much would $200 invested at 6% interest compounded annually be worth after 5 years? Round your answer to the nearest cent. Do not include units in your answer.

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  1. 15 November, 17:08
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    The answer is 267.65

    A = P (1 + r/n) ⁿˣ

    A - the future value

    P - the principal

    r - the annual rate

    n - the number of compoundings per year

    x - the period of time

    We know:

    A = ?

    P = $200

    r = 6% = 6%/100% = 0.06

    n = 1 (annualy means once per year)

    x = 5

    A = P (1 + r/n) ⁿˣ

    A = 200 * (1 + 0.06/1) ¹*⁵

    A = 200 * (1 + 0.06) ⁵

    A = 200 * (1.06) ⁵

    A = 267.65
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