Question

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

Answer 1

$621.33

Explanation:

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

`A(n)=P\left(1+(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+(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.