Question

George deposited $2,000 in his bank account, which offers 5 percent compound interest calculated annually. what would be the principal amount available in george’s account at the end of two years?

Answer 1

Answer:

2,205

Explanation:

I got it right on the test

Answer 2

Answer:

$2,205

Explanation:

The amount available after two years can be calculated using the formula

A= P x ( 1 + r) ^n

where A = amount

P= principal: $2000

r = interest rate : 5%, or 0.05

n = number of compound periods: 2

A= $2000 x ( 1 + 0.05)^2

A= $2000 x1.1025

A= $2,205

Principal amount after two years = $2,205