Final answer:
To calculate the future value of a $60,000 deposit compounded at 4% annually for 5 years, the compound interest formula A = P(1 + r/n)^(nt) is used, resulting in approximately $72,999.19.
Step-by-step explanation:
To find out how much money will be in the bank account after 5 years, given a principal deposit of $60,000 compounded at a 4% annual interest rate, you can use the compound interest formula:
A = P(1 + r/n)^(nt)
Where:
- A is the amount of money accumulated after n years, including interest.
- P is the principal amount (the initial amount of money).
- r is the annual interest rate (decimal).
- n is the number of times that interest is compounded per unit t.
- t is the time the money is invested for, in years.
For this question:
- P = $60,000
- r = 4% or 0.04
- n = 1 (compounded annually)
- t = 5 years
Plugging these values into the formula gives:
A = $60,000(1 + 0.04/1)^(1*5)
A = $60,000(1 + 0.04)^5
A = $60,000(1.21665316)
A = $72,999.19
Therefore, the amount in the account after 5 years will be approximately $72,999.19, assuming a 4% compound interest rate compounded annually.