A savings account pays 2% interest compounded annually. If $1,200 is deposited initially and again at the first of each year, how much money will be in the account three years after the initial deposit?

After three years, the initial $1,200 has earned interest for 3 years, the deposit after 1 year for 2 years, and the deposit after 2 years for 1 year. The balance is $1,200(1.02)^3 + $1,200(1.02)^2 + $1,200(1.02) = $3,745.93. The correct choice is $3,745.93.

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