Question

Question 1

If you deposit $2,000 in a bank account that pays 4% interest annually, how much will be in your account after 5 years? Do not round intermediate calculations. Round your answer to the nearest cent.

Answer 1

Step-by-step explanation:

The formula to calculate the future value of a present sum of money with compound interest is:

FV = PV x (1 + r)n

Where: FV = Future Value PV = Present Value r = Interest Rate per Period n = Number of Periods

In this case, the present value (PV) is $2,000, the interest rate (r) is 4% or 0.04 per year, and the number of periods (n) is 5 years. Therefore, we can calculate the future value (FV) as follows:

FV = $2,000 x (1 + 0.04)5 FV = $2,000 x 1.21665 FV = $2,433.30

Therefore, after 5 years, the amount in the account will be $2,433.30 (rounded to the nearest cent).