How much will $1000 deposited in an account earning 7% interest compounded annually be worth in 20 years?

Question

solomonzelman · Answer

This is the formula you need:

$\Large\color{blue}{ \displaystyle {\rm A}= {\rm P}\left(1+\frac{ {\rm r} }{ {\rm n} }\right)^{{\rm n} \times {\rm t}}  }$

$\Large\color{blue}{ \displaystyle {\rm r} }$    -   the interest rate (written as a decimal)
$\Large\color{blue}{ \displaystyle {\rm n} }$   -   the number of times that interest is compounded per year.
$\Large\color{blue}{ \displaystyle {\rm t}  }$    -   number of years (of investment).
$\Large\color{blue}{ \displaystyle {\rm P}  }$  -   the initial amount (the original deposite that you made into the bank).
$\Large\color{blue}{ \displaystyle {\rm A}  }$  -   the amount that you will get after this investment.

solomonzelman · Answer

P = 1000  (that is what you begin with)
r = 0.07   (because your interestrate is 7%, and that is 0.07 as a decimal)
n = 1       (because it says "compunded annually")
t = 20      (because it is asking you for the total amount after 20 years of investment)

solomonzelman · Answer

All you have to do is to plug your numbers and calculate the value of the investment (the value of A).

If you have questions, ask.

anonymous · Answer

Ok thanks

solomonzelman · Answer

yw