Question

You invest $2,000 in an account that has an annual interest rate of 3.2%, compounded annually. How much money will be in the account after 12 years? Round your answer to the nearest whole number.

Answer 1

Answer: 5070

Explanation:

6125= p(1=0.032/1)^1*6

6125=p(1.032)^6

6125=P(1.208)

5070.23=P

Answer 2

P = 2000 is the amount invested
r = 0.032 is the decimal form of 3.2%, which is the interest rate
n = 1 indicates we compound 1 time a year (compound annually)
t = 12 is the number of years

Those four values are plugged into the formula below
A = P*(1+r/n)^(n*t)
A = 2000*(1+0.032/1)^(1*12)
A = 2918.6792
A = 2919

Rounded to the nearest whole dollar, you'll have about $2919 in the account