Asavings account pays 2% interest compounded annually. if $1200 is deposited initially and again at the first of each year. how much money will be in the account after three years after the initial deposit?
a. $1248.48
b. $2472.48
c. $3672.48
d. $3745.93

The correct answer is D. $3,745.93

Step-by-step explanation:

1. Let's review the information given to us to answer this problem correctly:

Recurring annuity = US$ 1,200

Interest rate = 2% = 0.2 compounded annually

Time = 3 years after the initial deposit

2. Using the compound interest formula, we have:

Future value = Annuity * ( 1.02) ³ + Annuity * (1.02) ² + Annuity * (1.02)

Future value = 1,200 * ( 1.02) ³ + 1,200 * (1.02) ² + 1,200 * (1.02)

Future value = 1,273.45 + 1,248.48 + 1,224

Future value = US$ 3,745.93

The correct answer is D. $3,745.93