Question

You deposit $3000 each year into an account earning 2% interest compounded annually. How much will you have in the account in 20 years?

Answer 1

$72891.1094

Explanation:

This method of saving is called sinking fund.

Future value (FV) = A*(
`([(1+r)^(n) - 1])/(r)`)

Where A is the amortization, r is the rate and n the number of years.

A = $3000

r = 2% = 0.02

n = 20

FV = 3000 *
`(([(1.02)^(20) - 1])/(0.02))`

= 3000 * 24.2973698

= 72891.1094

FV = $ 72891.1094

The amount that would be in the account after 20 years is $72891.1094