The amount $300 after 1 year and 2 year become $318 and $337.08 respectively.
It is given that the deposit amount is $300 in an account with a 6% annual interest rate.
It is required to find the money after 1 year and 2 year.
What is compound interest?
It is defined as the interest on the principal value or deposit and the interest which is gained on the principal value in the previous year.
We can calculate the compound interest using the below formula:
[tex]\rm A= P(1+r)^t[/tex]
Where A = Final amount
P = Principal amount
r = annual rate of interest
t = How long the money is deposited or borrowed (in years)
We have P = $300
r = 6% = 0.06
t = 1 years
Putting the values in the formula, we get;
[tex]\rm A= 300(1+0.06)^1\\\\\rm A = 300(1.06)\\\\\rm A = \$318[/tex]
After 2 year:
[tex]\rm A= 300(1+0.06)^2\\\\\rm A = 300(1.06)^2\\\\\rm A = \$337.08[/tex]
Thus, the amount $300 after 1 year and after 2 year become $318 and $337.08 respectively.
Learn more about the compound interest here:
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