Question

A principal of 2000 is invested at 3.25% interest, compounded annually. How much will the investment be worth after 10 years?

Answer 1

Answer:

$2,753.79

Step-by-step explanation:

Compound Interest Formula

$\large \sf A=P\left(1+\frac{r}{n}\right)^{nt}$

where:

• A = final amount
• P = principal amount
• r = interest rate (in decimal form)
• n = number of times interest applied per time period
• t = number of time periods elapsed

Given:

• P = $2,000
• r = 3.25% = 0.0325
• n = 1
• t = 10

Substitute the given values into the formula and solve for A:

$\implies \sf A=2000\left(1+\frac{0.0325}{1}\right)^{(1 \times 10)}$

$\implies \sf A=2000(1.0325)^{10}$

$\implies \sf A=2753.788608...$

Therefore, the value of the investment after 10 years will be $2,753.79 to the nearest cent.