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What is the compound interest on $1000 for 2 years at a rate of 6% per annum?

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Question: What is the compound interest on $1000 for 2 years at a rate of 6% per annum?

Options:

  1. $126.00
  2. $120.00
  3. $136.00
  4. $140.00

Correct Answer: $126.00

Solution: 

Compound Interest = 1000(1 + 0.06)^2 - 1000 = 1000(1.1236) - 1000 = 1123.60 - 1000 = 126.00

What is the compound interest on $1000 for 2 years at a rate of 6% per annum?

Practice Questions

Q1
What is the compound interest on $1000 for 2 years at a rate of 6% per annum?
  1. $126.00
  2. $120.00
  3. $136.00
  4. $140.00

Questions & Step-by-Step Solutions

What is the compound interest on $1000 for 2 years at a rate of 6% per annum?
  • Compound Interest – The interest calculated on the initial principal, which also includes all the accumulated interest from previous periods on a deposit or loan.
  • Exponential Growth – Understanding how money grows over time when interest is compounded.
  • Percentage Calculation – Applying percentage rates to calculate interest over a specified time period.
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