On Eric’s first birthday, his parents deposited $2,000 into a savings account that earns a fixed rate of 6.00% and compounds interest annually. How much money will Eric’s account have accumulated by his 20th birthday? (Hint: Round your answer to the nearest dollar.)

What-If Scenario 1

What would have been the balance in Eric’s account if his parents had waited until his 10th birthday to make their initial deposit into the same account?

What-If Scenario 2

If Eric’s parents wanted to accumulate an account balance of $17,500 by his 20th birthday, then how much should they have placed on deposit on his first birthday?

 

 

Periods 4.50% 7 8 9 10 11 12 13 Interest Factors 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 1.5036 1.6058 1.6590 1.4071 1.4547 1.5540 1.5347 1.5938 1.6550 1.7182 1.7835 1.6191 1.6895 1.7626 1.8385 1.9172 1.8771 1.9672 2.0610 1.9992 2.1049 2.2156 2.3316 2.1291 2.2522 2.3818 2.5182 2.2675 2.4098 2.5604 1.3609 1.4221 1.4775 1.4861 1.5513 1.5530 1.6289 1.7000 1.7908 1.6229 1.7103 1.8021 1.8983 1.6959 1.7959 1.8832 2.0122 1.7722 1.8856 1.9868 2.1329 8.00% 8.50% 9.00% 1.7138 1.7701 1.8280 1.8509 1.9206 1.9926 1.9990 2.0839 2.1589 2.2610 2.4532 2.6617 2.7196 2.8879 2.1719 2.3674 2.5804 2.8127 3.0658