You deposit $200 in an account earning 8% interest compounded annually. How much will you have in the account in 20 years?
To calculate the amount of money you will have in the account in 20 years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment
P = the principal amount (initial deposit amount of $200)
r = annual interest rate (8% or 0.08)
n = number of times the interest is compounded per year (annually)
t = number of years (20)
Plugging the values into the formula:
A = 200(1 + 0.08/1)^(1*20)
A = 200(1 + 0.08)^(20)
A = 200(1.08)^(20)
A = 200 * 4.66
A ≈ $932
Therefore, you will have approximately $932 in the account in 20 years.