Question

You are investing $1,000 in a bank account that will pay you 2% interest. How much will you have in your account after 12 years if you make no other changes? Round to the nearest penny.

a) $1,240
b) $1,240.20
c) $1,240.40
d) $1,239.60

Answer 1

To calculate the amount of money you will have in your account after 12 years with a 2% interest rate, use the compound interest formula: A = P(1 + r/n)^(nt). Plugging in the values, you will have approximately $1,240.20 in your account after 12 years.

Step-by-step explanation:

To calculate the amount of money you will have in your account after 12 years with a 2% interest rate, you can use the compound interest formula:

A = P(1 + r/n)^(nt)

Where:

• A is the final amount of money in the account
• P is the initial amount of money you are investing ($1,000)
• r is the annual interest rate (0.02)
• n is the number of times interest is compounded per year (1, since it is compounded annually)
• t is the number of years (12)

Plugging in these values into the formula:

A = 1000(1 + 0.02/1)^(1*12)

A = 1000(1.02)^12

A ≈ $1,240.20

Therefore, you will have approximately $1,240.20 in your account after 12 years.