Question

Felix's parents opened a savings

account for him when he was born with
a $2,000 deposit. The account earns 6%
compound interest, compounded
annually. How much money will be in
Felix's account when he is 21?

Answer 1

The money in the Felix's account will be $6798 when he is 21.

Explanation:

It is given that,

• The amount deposited is $2000.
• The account earns 6% compound interest.
• It is compounded annually for 21 years.

To find the money in Felix's account after 21 years :

The formula used here is,

⇒
`A = P(1+r/n)^(nt)`

where A is the amount after 21 years.

• P is the initial amount deposited ⇒ P = 2000
• r is the rate ⇒ r = 0.06
• n is the number of times interest is compounded per year⇒ n = 1
• t is the time period ⇒ t = 21

⇒
`2000(1+0.06/1)^(21* 1)`

⇒
`2000(1.06)^(21)`

⇒
`2000*3.399`

⇒
`6798`

Therefore, The money in the Felix's account will be $6798 when he is 21.