Question

Before solving any of the following problems: identify the variables that are given and which one is unknown. Then solve the problem, rounding to two decimal places. 7) Tyrone deposits his yearly bonus of $1000 into an account that earns 2% interest compounded annually . How much will he have in the account after 20 years of working at his job?

Answer 1

Step-by-step explanation

For a sum compounded annually, the Annuity formula is given by:

`\begin{gathered} A=P*(1-(1+r)^(-n))/(r) \\ \\ where\text{ P =Initial deposit =\$1000} \\ r=rate\text{ of interest=2 \% =0.02} \\ n=the\text{ number of years compounded =20} \end{gathered}`

Thus, we will compute the amount that will be in his account as:

`A=1000*(1-(1+0.02)^(-20))/(0.02)`
`\begin{gathered} A=1000*(0.3270)/(0.02) \\ \\ A=16351.43 \end{gathered}`

Therefore, after 20 years, he will have had the sum of $16351.43 in his account