SOLUTION: Latifah opens a bank account with $800. The account accrues 6% interest compounded annually. How much money will she have in her account at the end of 2 years, rounded to the ne

Question 896221: Latifah opens a bank account with $800. The account accrues 6% interest compounded annually.
How much money will she have in her account at the end of 2 years, rounded to the nearest cent?
Answer by jim_thompson5910(35256) (Show Source): You can put this solution on YOUR website!
We'll be using the formula where
A = amount in the account after t years
P = initial deposit (principal)
r = interest rate as a decimal
n = compounding frequency
t = number of years

In this case,

A = unknown (we're solving for it)
P = 800
r = 0.06 (6% = 6/100 = 0.06)
n = 1 (compounded annually = compounding 1 time per year)
t = 2 years

Plug all this info into the formula to get...

She will have $898.88 in the account at the end of the two years.

Side Note: She has earned A - P = 898.88 - 800 = $98.88 in interest alone.
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