Question

Suppose we deposit $2519 in a savings account earning 2.5% per year, compounded annually. Calculate the value of the account at the end of year 34. Do not round until the very last calculation. Then round your answer to the nearest whole number.

A) $4265
B) $3743
C) $3192
D) $4561

Answer 1

To calculate the value of a savings account with compound interest, use the formula A = P(1 + r)^t. For this case, the value of the account at the end of year 34 is approximately $4265.

Step-by-step explanation:

To calculate the value of a savings account after a certain number of years, we can use the formula for compound interest: A = P(1 + r)^t, where A is the final amount, P is the principal (initial deposit), r is the interest rate (as a decimal), and t is the number of years. In this case, the principal is $2519, the interest rate is 2.5% or 0.025, and the number of years is 34.

So, the formula becomes: A = 2519(1 + 0.025)^34.

Now, we can plug these values into a calculator or spreadsheet to find the answer. Rounding to the nearest whole number, the value of the account at the end of year 34 is approximately $4265.