Question

You worked hard over the summer and earned an extra $2,000. You decided to deposit that amount into your savings account. This savings account will earn 2.0% interest annually and no other deposits will be made. What is the future value of your deposit after 6 years?

Answer 1

The future value of deposit will be $2252.324

Steps by step with Explanation:

Given in the question is the interest rate that is 2%

Earning $2000

Calculation,

2/100 x 2000 = 40

Deposit after 1 year: 2040

2% of 2040,

2/100 x 2040 = 40.8

Deposit after 2 years: 2080.8

2% of 2080.8= 41.616

Deposit after 3 years =2122.416

2% of 2122.416 = 42.44832

Deposit after 4 years = 2164.86432

2% of 2164.86432 = 43.2972864

Deposit after 5 years: 2208.161606

2% of 2208.161606 = 44.16323213

Deposit after 6 years: 2252.324838

Therefore, after 6 years the future value of deposit will be $2252.324

Answer 2

If we are taking of compound interest after the first year $2,040. In the second year is $2,080.08. In the third year is $2,122.42. In the fourth year $2,164.86. In the fifth year $2,208.16. In the sixth year the future value deposit will be $2,252.32.