Liam puts $2,000 in the bank with a 3% annual interest rate compounded annually. If Liam does not touch his money, how much money will he have after two years?
A $2,000.06$2,000.06
B $2,060.00$2,060.00
C $2,120.00$2,120.00
D $2,121.80
To find the amount of money Liam will have after two years, we can use the formula for compound interest:
$A = P \left(1 + \frac{r}{100}\right)^n$
Where:
- A is the total amount of money Liam will have after n years
- P is the principal amount (initial deposit)
- r is the annual interest rate
- n is the number of years that the money is invested for
In this case:
- Our initial deposit (principal) is $2,000
- The annual interest rate is 3%
- The number of years is 2
Plugging in the values into the formula, we get:
$A = $2,000 \left(1 + \frac{3}{100}\right)^2$
$A = $2,000 \left(1 + 0.03\right)^2$
$A = $2,000 \times 1.03^2$
$A = $2,000 \times 1.0609$
$A \approx $2,121.80
Therefore, Liam will have approximately $2,121.80 after two years.
The correct option is D.