Answer:
$3870
Step-by-step explanation:
Hello, the initial deposit is $1000.
After one year, we will get 1000 + 7%*1000= 1000 * ( 1+7%) = 1000 * (1+0.07)
= 1000 * 1.07
And we want to compound it so the second year we will get
[tex]1000 * 1.07 * 1.07 = 1000 * 1.07^2[/tex]
And after n years, we will get
[tex]1000 * 1.07^n[/tex]
In that example, we want to know how much we will get after 20 years, so this is:
[tex]1000 * 1.07^{20}=3869.684462...[/tex]
Thank you.
When interest is compounded, it means that both the interest and the amount deposited will earn interest.
We are to determine the future value of $1000 with annual compounding.
The formula for calculating future value:
FV = P (1 + r)^n
FV = Future value
P = amount deposited = $1000
R = interest rate = 7%
N = number of years = 20
$1000 x ( 1.07)^20 = $3,869.68
To learn more about compound interest, please check: https://brainly.com/question/14295570?referrer=searchResults
