Question

PLEASE HELP!!

On a child’s birth, a deposit of $2000 was put into an account that pays 5% interest compounded annually. How much is in the account after 18 years?

Answer 1

Answer: $4,813.24

Explanation:

This requires the use of a future value formula because we are to find the value of an amount in future after compounding it over a certain period.

Future Value = Amount * (1 + rate) ^ number of years

= 2,000 * ( 1 + 5%)¹⁸

= $4,813.24

In 18 years, the $2,000 would have increased to $4,813.24.