You deposit $2000 in an account earning 2% interest compounded monthly. How much will you have in the account in 15 years?

Question

You deposit $2000 in an account earning 2% interest compounded monthly. How much will you have in the account in 15 years?

Answer 1

The formula for compound interest is:

A = P (1+ r/n)^nt, where:

A = Final amount. This is what we are looking for.

P = Principal = 2000

r = rate = 2% = .02

n = number of compounding in a year. Since it is compounded monthly, n=12.

t = number of years the principal will be compounded = 15.

A = 2000 (1 + .02/12) ^12*15

A = 2000 (1 + 0.001666...)¹⁸⁰

A ≈ $2699.04