SOLUTION: You deposit $2000 each year into an account earning 7% interest compounded annually. How much will you have in the account in 20 years?

Question 1122074: You deposit $2000 each year into an account earning 7% interest compounded annually. How much will you have in the account in 20 years?
Answer by ikleyn(52797)   (Show Source): You can put this solution on YOUR website!
.
There are two types of saving accounts that work in accordance with this scheme:

        a) Ordinary Annuity saving plan,   and

        b) Annuity Due saving plan.

Under Ordinary Annuity saving plan you deposit $2000 at the end of each year;
under Annuity Due saving plan you deposit $2000 at the beginning of each year.

I will give you the solution for the Ordinary Annuity plan only.

     (When such a problem comes without explicit naming the plan, I am 100% sure that it means an Ordinary Annuity).

The formula is

    The future value in 20 years =  = $81,990.98.


    Notice that you deposit only $2000*20 = $40,000.

    The rest is compound percents that the account earns in 20 years.

On both plans, you can learn and read from the lessons
- Ordinary Annuity saving plans and geometric progressions
- Annuity Due saving plans and geometric progressions
in this site.

RELATED QUESTIONS
You deposit $2000 each year into an account earning 2% interest compounded annually.... (answered by CubeyThePenguin,ikleyn)

You deposit $5000 at the beginning of each year into an account earning 7% interest... (answered by ikleyn)

ou deposit $5000 at the beginning of each year into an account earning 7% interest... (answered by ikleyn)

You deposit $2000 each year into an account earning 2% compounded annually. How much will (answered by Boreal)

You deposit $3000 at the beginning of each year into an account earning 6% interest... (answered by ikleyn)

You deposit $1000 at the end of each year into an account earning 4% interest compounded... (answered by ikleyn)

You deposit $3000 at the beginning of each year into an account earning 6% interest... (answered by ikleyn)

You deposit $3000 at the beginning of each year into an account earning 3% interest... (answered by Theo)

You deposit $1000 each year into an account earning 2% interest compounded annually. How... (answered by rfer)