The question states the interest is compounded annually. We have to use the given formula for this.
Principal Amount = P = $500
Interest Rate = r = 6% = 0.06
Time in years = t = 12
Compounding periods in a year = n = 1
Using the values in the given formula we get:
[tex]A(t)=500(1+ \frac{0.06}{1})^{12*1} \\ \\
A(t)=$1006.10 [/tex]
Thus, rounding to nearest cent the answer to this question is 1006.10
However, if you are also interested in finding the compound interest that is compounded continuously, use the following formula:
[tex]A(t)=Pe^{rt} [/tex]
