Question

How much money will be in the account if you deposit $1000 in an account with 4% annual compound interest, assuming no additional deposits or withdrawals?

Answer 1

To determine the future value of a deposit with annual compound interest, apply the formula FV = P × (1 + r)^n. For a $1000 deposit at 4% annual compound interest, after one year, you would have $1040 in the account.

Step-by-step explanation:

To calculate the future value of a deposit in an account with compound interest, we use the formula for compound interest:

FV = P × (1 + r)^n

Where:

• FV represents the future value of the investment.
• P is the principal amount (the initial amount of money).
• r is the annual interest rate (decimal).
• n is the number of years the money is invested.

For a $1000 deposit at 4% annual compound interest, with no additional deposits or withdrawals:

FV = $1000 × (1 + 0.04)^1 = $1000 × 1.04 = $1040

After one year, you would have $1040 in the account.