Question

$290 due in 7 years at 11 1⁄2% compoundedannually......... Ask Tutor a question about your assignment

Answer 1

Answer:

$621.33

Explanation:

The amount due at compound interest is calculated using the formula below:

$A(n)=P\left(1+\frac{r}{k}\right)^{nk}\text{ where }\begin{cases}P=\text{Principal Invested} \\ r=\text{Interest Rate} \\ k=\text{Number of compounding periods}\end{cases}$

In our case:

• P =$290

,

• n = 7 years

,

• k = 1 (Annually)

,

• r = 11 1/2% = 11.5% = 0.115

Substitute these values into the formula:

$\begin{gathered} A(7)=290\left(1+\frac{0.115}{1}\right)^{7(1)} \\ =290(1+0.115)^7 \\ =290(1.115)^7 \\ =\ 621.33 \end{gathered}$

The amount at the end of 7 years is $621.33.