Suppose you deposit $400 in a savings account. If the interest rate is 5% per year, what is the interest earned in six years?

1 Answer
Shulgin
Mar 31, 2018

536 usd

Explanation:

This would be an compound interest. Meaning that your gain every year would increase exponentially.
The equation to calculate this would be:

K_n = K_0 * (1+ p/100)^n

  • K_n is your savings after the period n
  • K_0 is your starting deposit
  • p is the percentage
  • n is the period of interest

for your example we would have.

K_n= 400 * (1+5/100)^6

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