Question

If $2,000 is invested at 11% annual interest compounded quarterly, what is the account balance after 10 years, assuming no additional deposits or withdrawals are made?

Answer 1

$5,919.75

Explanation:

Answer 2

What is Annual Compound Interest?

Annual compound interest is represented by this formula:

`A = P ( 1 + (r)/(n)) ^((n)(t))`

• A= Final value (including interest)
• P = principal/original amount: $2000
• r = rate as a decimal: 0.11
• n= number of times compounded yearly: quarterly: 4
• t= numbers of years borrowed for: 10

You have been giving all the information needed to solve this equation, so plug in what you have. and solve for A.

`A = (2000)( 1 + (0.11)/(4) )^((4)(10))`

`A = (2000) (1.0275)^(40)`

`A = (2000) (2.9598739872)\\`

`A = 5919.74797`

Round your answer to the nearest hundred, and the account balance after 10 years should be $5,919. 75