Question

You deposit $1000 each year into an account earning 7% interest compounded annually. How much will you have in the account in 30 years?

Answer 1

Given the question in the question tab, the following are the solution steps to answer the question.

STEP 1: Write the formula for calculating Compound Amount

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

Where A =final amount

P=initial principal balance

r=interest rate

n=number of times interest applied per time period

t=number of time periods elapsed

STEP 2: Write the given parameters

`P=1000,r=(7)/(100)=0.07,t=30,n=1\text{ since it is compounded annually}`

STEP 3: Calculate the compounded amount

`\begin{gathered} A=1000(1+(0.07)/(1))^(1*30) \\ A=1000(1.07)^(30) \\ A=1000(7.612255043) \\ A=7612.255043 \\ A\approx\text{\$}7612.26\text{ } \end{gathered}`

Hence, the amount in the account after 30 years is $7612.26 to the nearest cents