Question

You invest $800 in an account with an annual interest rate of 3.2%, compounded annually. How much in in the account after 20 years? Round your answer to the nearest whole number.

Answer 1

The compound interest formula is:

F = P * (1+i) ^ (n*t)

where:
F = future value
P = present value
i = r/n ; r = interest rate, n = number of times interest is compounded per year
t = number of years

Substituting:


F = 800 * ( 1 + .032/1 ) ^ (1*15) ; n=1 since compounded annually
F = 800 * ( 1 + 0.032) ^ (15)
F = 800 * ( 1.032) ^ 15
F = 800 * ( 1.60396711263693 )
F = 1283.17369010954

So there will be $1283.174 in the account.