Question

As long as you follow through with a plan to save $2000 a year, at the end of each year, in your account that earns 4% interest how much would you have after 25 years future value?

Answer 1

We have to use the simple interest formula.

$A=P(1+rt)$

Where P = 2,000, r = 0.04, t = 25. Let's solve for A

$\begin{gathered} A=2,000(1+0.04\cdot25)=2\cdot2,000 \\ A=4,000 \end{gathered}$

Therefore, you will have $4,000 in 25 years.