Question

you deposit 1000 for 4 years at an interest rate of 2.0% if the interest is compounded annually how much money do you have after 4 years A: 1,082.40 B: 1,100.00 C: 1,103.80 D: 1,344.90

Answer 1

If you would like to know how much money will you have after 4 years, you can calculate this using the following steps:

1 year: 1000 + 2% of 1000 = 1000 + 2% * 1000 = 1000 + 2/100 * 1000 = 1000 + 20 = 1020
2 year: 1020 + 2% of 1020 = 1020 + 2% * 1020 = 1020 + 2/100 * 1020 = 1020 + 20.4 = 1040.4
3 year: 1040.4 + 2% of 1040.4 = 1040.4 + 2% * 1040.4 = 1040.4 + 2/100 * 1040.4 = 1040.4 + 20.808 = 1061.208
4 year: 1061.208 + 2% of 1061.208 = 1061.208 + 2% * 1061.208 = 1061.208 + 2/100 * 1061.208 = 1061.208 + 21.22 = 1082.43

The correct result would be A: 1,082.40.