You deposit $2000 each year into an account earning 2% interest compounded annually. How much will you have in the account in 20 years? Round your answer to the nearest whole dollar.
We can solve this problem using the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested or borrowed for
In this case, we have:
P = $2000
r = 2% = 0.02 (as a decimal)
n = 1 (compounded annually)
t = 20 years
Plugging in these values, we get:
A = 2000(1 + 0.02/1)^(1*20)
= 2000(1 + 0.02)^20
= 2000(1.02)^20
Using a calculator, we find:
A ≈ $2,491.71
Rounding to the nearest whole dollar, we have $2,492.