Question

A $3,000 annual contribution to a retirement account earning 6% will be worth ____ in 20 years.

Answer 1

Answer:

$60,001.20

Explanation:

3,000 + 6% = 3,000.06 × 20 = 60,001.2

Answer 2

Answer with Explanation:

Question does not state what kind of interest, here are the three common possibilities:

1. Simple interest of 6%:

Future value (FV) = 3000*(1+0.06*20) = $6600

2. compounded annually:

Future value (FV) = 3000*(1+0.06)^20 = $9621.41 (nearest cent)

3. compounded monthly:

Future value (FV) = 3000*(1+0.06/12)^(20*12) = $9930.61 (nearest cent)