Question

A principal of $2600 is invested at 7% interest, compounded annually. How much will the investment be worth after 13 years?

Use the calculator provided and round your answer to the nearest dollar.

Answer 1

The total amount accrued, principal plus interest, from compound interest on an original principal of $ 2600 at a rate of 7% per year compounded 1 time per year over 13 years is $ 6266.

Explanation:

Given

Principle P = $2600

Interest rate r = 7% = 0.07

Time period t = 13 years

Compounded annually means: n = 1

To determine

Accrued Amount = ?

Using the formula

`A\:=\:P\left(1\:+\:(r)/(n)\right)^(nt)`

substituting P = 2600, r = 0.07, t = 13, n = 1

`A\:=\:2600\left(1\:+\:(0.07)/(1)\right)^(1\left(13\right))`

`A=2600\left(1+0.07\right)^(1\cdot \:13)`

`A = 6266` $

Therefore, the total amount accrued, principal plus interest, from compound interest on an original principal of $ 2600 at a rate of 7% per year compounded 1 time per year over 13 years is $ 6266.