Jeffrey is saving up for a down payment on a car. He plans to invest $2,000 at the end of every year for 4 years. If the interest rate on the account is 2.15% compounding annually, what is the present value of the investment?

Question

hazardouschisle · Answer

alright so
you take 2000 and multiply it by .215 you get 2043.46
multiply that by 4 and you will get your answer 
not allowed to give direct answers

Mercury · Answer

Politely disagree with the previous answer, as this problem is based on compound interest, not simple interest.

Annual compound interest formula: A = P(1+r)^t, where P is the principal, r is the interest rate as a decimal (which is 0.0215, not .215), and t is time (4 years). however, this problem is a bit more complicated, as you'll have to re-calculate the balance and interest at the end of each year, as he's adding more money each year.