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?
Responses
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(1 + r/n)^(nt)
Where:
A = the final amount of money
P = the principal amount (initial deposit)
r = annual interest rate (as a decimal)
n = number of times interest is compounded per year
t = number of years
In this case, Liam's initial deposit (principal) is $2,000, the annual interest rate (r) is 3% or 0.03, the number of times interest is compounded per year (n) is 1 (compounded annually), and the number of years (t) is 2.
Let's plug these values into the formula:
A = $2,000(1 + 0.03/1)^(1*2)
A = $2,000(1 + 0.03)^2
A = $2,000(1.03)^2
A ≈ $2,120.00
Therefore, Liam will have approximately $2,120.00 after two years.
The correct answer is C) $2,120.00.