Question

You deposit $1000 each year into an account earning 5% interest compounded annually. How much will you have in the account in 20 years?

Note: Round your answer to the nearest cent.

$

Answer 1

Answer: You will have approximately $2653.30 in the account after 20 years.

Step-by-step explanation: To calculate the future value of an account with annual compounding interest, we can use the formula:

FV = P * (1 + r)^n

Where:

FV = Future Value

P = Principal amount (initial deposit)

r = Interest rate (as a decimal)

n = Number of compounding periods

In this case, the principal amount is $1000, the interest rate is 5% (or 0.05), and the number of compounding periods is 20 years.

Plugging in the values:

FV = 1000 * (1 + 0.05)^20

Calculating the result:

FV ≈ $2653.30

Therefore, you will have approximately $2653.30 in the account after 20 years.