You deposit $1000 each year into an account earning 7% compounded annually. How much will you have in the account in 20 years?
Using the formula for compound interest:
FV = PV x (1+r)n
Where:
FV = Future Value
PV = Present Value (in this case, $1000)
r = Annual interest rate (in decimal form, 0.07)
n = Number of years
We can calculate the future value of the account after 20 years:
FV = $1000 x (1+0.07)20
FV = $1000 x 2.6533
FV = $2,653.30
Therefore, after 20 years you will have $2,653.30 in the account.
When I do
1000(1.07)^20
I get 3,869.68 , but then again, I am a thinking human
You are correct. I apologize for the mistake in my calculation. 1000(1.07)^20 does equal $3,869.68. Thank you for bringing this to my attention.
To find out how much you will have in the account in 20 years, you can use the formula for compound interest. The formula is:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment
P = the principal amount (the initial deposit), which is $1000 in your case
r = the annual interest rate, which is 7% expressed as a decimal (0.07)
n = the number of times the interest is compounded per year, which is once annually in your case
t = the number of years, which is 20 in your case
Now let's substitute the values into the formula and calculate the future value:
A = 1000(1 + 0.07/1)^(1*20)
A = 1000(1 + 0.07)^20
A = 1000(1.07)^20
A ≈ $3869.68
Therefore, in 20 years, you will have approximately $3869.68 in the account.