Jamal deposits $1000 into a savings account on his 18th birthday. If the 2% interest is compounded yearly, how much will he have in the account on his 65th birthday? Write your answer as a decimal rounded to the hundredths place. Do not include the dollar sign as part of your answer.

Accepted Solution

The number of years (n) that the deposit stayed in his balance is given by: 65 - 18 = 47 years.

The future value (FV) of a deposit (P), deposited at an interest rate of r% compounded yearly for n years is given by


Given that Jamal deposits P = $1000 into a savings account on for n = 47years at 2% interest compounded yearly, the amount in his bank account at the end of the period is given by

[tex]FV=1000(1+0.02)^{47} \\ \\ =1000(1.02)^{47}=1000(2.53634) \\ \\ =\$2,536.34[/tex]