Math Help - Compound Interest

1. Compound Interest

Hello

I am having difficulty with this question. I know the formulas for calculating compound interest annually, monthly ect however I do not how to apply these to this question:

Q. How much is owed after two years if \$2000 is borrowed at 6% per annum compound interest compound monthly and no repayments being made before the end of the two years?

I've started with p= 2000 n= 2 and r= 6

next I did: 2000(1.06)^2 however I was incorrect.

Thank you for any help

2. The formula you want to use is
$A = P\left(1 + \frac{r}{n}\right)^{nt}$
where:
P = principal amount (initial investment),
r = annual interest rate (as a decimal),
n = number of times the interest is compounded per year (monthly = 12, quarterly = 4, etc.),
t = number of years, and
A = amount after time t

P = 2000
r = 0.06
n = 12
t = 2

\begin{aligned}
A &= P\left(1 + \frac{r}{n}\right)^{nt} \\
&= 2000\left(1 + \frac{0.06}{12}\right)^{12(2)} \\
&= 2000(1.005)^{24} \\
&\approx 2254.32
\end{aligned}

01

3. Thank you