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?
吃
$2,000.06
•x
$2,060.00
$2, 120.00
D
$2,121.80
The formula to calculate compounded interest is:
A = P (1 + r/n)^(nt)
where:
A = amount after time t
P = principal amount (initial deposit)
r = annual interest rate (in decimal form)
n = number of times interest is compounded per year
t = number of years
In this case, Liam's initial deposit is $2,000 and the interest rate is 3% (or 0.03 in decimal form). The interest is compounded annually, so n = 1. We are looking to calculate the amount after 2 years, so t = 2.
Using the formula, we have:
A = 2000 (1 + 0.03/1)^(1*2)
= 2000 (1 + 0.03)^2
= 2000 (1.03)^2
= 2000 * 1.0609
= $2,121.80
Therefore, Liam will have $2,121.80 after two years.