Final answer:
When $2,000 is deposited in a bank account with a 3% compound interest rate, compounded annually, the amount available after 2 years will be $2,121.80.
Step-by-step explanation:
If you deposit $2,000 into a bank account that pays 3 percent compound interest per year, you need to use the compound interest formula to calculate the total amount in the account after 2 years:
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 ($2,000).
- r is the annual interest rate (decimal).
- n is the number of times that interest is compounded per year.
- t is the time in years.
Since the interest is compounded annually, n is 1, r is 0.03 (3 percent in decimal form), t is 2 years, and P is $2,000:
A = 2000(1 + 0.03/1)^(1*2)
A = 2000(1.03)^2
A = 2000(1.0609)
A = $2,121.80
After 2 years, the amount in the bank account will be $2,121.80.