Question

Problem Page A principal of $2100 is invested at 7.75% interest, compounded annually. How much will the investment be worth after 12 years?

Answer 1

Answer:

After 12 years the investment will be worth $5145.

Step-by-step explanation:

The formula used for compounded interest is:

A = P(1+r/n)^nt

where,

A = future value

P = Principal Amount

r = interest rate

n = no of times interest is compounded

t = time

In the question given:

A=?

P = $2100

r = 7.75% or 0.0775

n = 1

t= 12

A= 2100*(1+0.0775/1)^1*12

A= 2100 *(1+0.0775)^12

A= 2100 *(1.0775)^12

A= 2100 * 2.45

A= 5145

So, after 12 years the investment will be worth $5145.