You deposit $2000 each year into an account earning 2% interest compounded annually. How much will you have in the account in 20 years? Round your answer to the nearest whole dollar.

Answer 1

We can solve this problem using the formula for compound interest:

A = P(1 + r/n)^(nt)

Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested or borrowed for

In this case, we have:
P = $2000
r = 2% = 0.02 (as a decimal)
n = 1 (compounded annually)
t = 20 years

Plugging in these values, we get:

A = 2000(1 + 0.02/1)^(1*20)
= 2000(1 + 0.02)^20
= 2000(1.02)^20

Using a calculator, we find:

A ≈ $2,491.71

Rounding to the nearest whole dollar, we have $2,492.