Suppose that 2000 is invested at a rate of 3.3% compounded quarterly. Assuming that no withdrawals are made,find the total amount after 7 years. Do not round any intermediate computations, and round your answer to the nearest cent.

Question

Answer 1

To solve this problem, we will use the formula for compound interest:

where:-

is the amount of money accumulated after

years, including interest.-

is the principal amount (the initial amount of money).-

is the annual interest rate (decimal).-

is the number of times that interest is compounded per year.-

is the time the money is invested for in years.Given:-

-

(since the interest is compounded quarterly)-

yearsNow, plug these values into the formula:

First, calculate the quarterly interest rate:

Next, add 1 to the quarterly interest rate:

Then, raise this to the power of

:

Finally, multiply this by the principal amount:

So, the total amount after 7 years is approximately \$2536.48.

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