1: You deposit $2000 each year into an account earning 3% interest compounded annually. How much will you have in the account in 30 years

Question

You deposit $2000 each year into an account earning 3% interest compounded annually. How much will you have in the account in 30 years? (Round down to the cents place.)

$__________

Answer 1

You're paying $2,000/yr into an account earning 3% interest compounded annually. What is the balance after 30 years? Think of it as a series of $2000 deposits, the first of which earns interest for 30 years, the 2nd for 29 years, etc.

The formula is A = PMT x [(1 + APR/n)^(nY) - 1]/(APR/n) where A = accumulated balance, PMT is regular deposit amount, APR is annual percentage rate (decimal), n = no. of payment periods/yr, Y = no. of years.

A = 2000 x [1 + 0.03/1)^1x30 - 1]/(0.03/1) ≅ $95,151

Answer 2

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

Whatare we given?

P = 2000

r = 0.03

n = 1

t = 30

2000(1 + 0.03/1)¹⁽³⁰⁾ = your answer