Question

You deposit $3000 each year into an account earning 4% interest compounded annually. How much will youhave in the account in 25 years?

Answer 1

In this case, we'll have to carry out several steps to find the solution.

Step 01:

Data:

principal = $3000

rate (interest) = 4%

time = 25 years

Step 02:

compound interest:

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

r = 4% = 4/100 = 0.04

t = 25

n = 1

`A\text{ = 3000}\cdot\text{(1+ }(0.04)/(1))^(1\cdot25)`
`A=3000(1+0.04)^(25)=3000(1.04)^(25)=3000(2.67)`

A = 7997.51

The answer is:

You will have $ 7997.51