An initial investment of 1000 is appreciated for 2 years in

An initial investment of $1000 is appreciated for 2 years in an account that earns 11% interest, compounded annually. Find the amount of money in the account a the end of the period.

Solution

Formula for compounding annually:

Amount = Principal( 1 + r/100)^t

P = $1000 ; t = 2yrs ; r = 11%

Amount = P( 1 +11/100)^(2)

= $1000( 1 +0.11)^2

=$ 1232.1 would be the amount of money in the account a the end of the period.