Question

Elaine opened a savings account with a deposit of $1000. The interest on her account is compounded each year at a rate of 2%. Elaine will not make any additional deposits to or withdrawals from her account. What will be the balance in Elaine's account at the end of 3 years? Round your answer to the nearest whole dollar.

Answer 1

Answer:

$1,061.21

Step-by-step explanation:

According to the scenario, computation of the given data are as follows,

Present value (PV) = $1,000

Rate of interest compounded yearly (r) = 2%

Time period (n) = 3

So, we can calculate the future value (FV) by using following formula,

Future Value = PV(1 + r)^n

By putting the value, we get

FV = $1,000 ( 1 + 0.02)^3

= $1,000 ( 1.02)^3

= $1,000 ( 1.061208)

= $1,061.21