Final answer:
The $1000 deposited in an account earning 7% interest compounded annually will be worth $2653.30 in 20 years.
Step-by-step explanation:
To calculate the value of the $1000 deposit after 20 years at 7% interest compounded annually, we can use the compound interest formula:
A = P(1 + r/n)^(nt),
where A is the final amount, P is the principal amount, r is the annual interest rate (in decimal form), n is the number of times interest is compounded per year, and t is the number of years.
Plugging in the values, we get:
A = 1000(1 + 0.07/1)^(1*20)
A = 1000(1 + 0.07)^20
A = 1000(1.07)^20
A = 1000 * 2.653297
A = $2653.30
Therefore, the correct option is A) $2500.