The value of Amanda's investment can be calculated using the formula for compound interest:
A = P(1 + r/n)^(nt)
where:
A = the final amount
P = the initial principal (5000)
r = the annual interest rate (2%)
n = the number of times the interest is compounded per year
t = the time in years (3)
Converting the interest rate to a decimal:
r = 0.02
Since the interest is compounded annually, n = 1.
Plugging in the values into the formula:
A = 5000(1 + 0.02/1)^(1 * 3)
A = 5000(1.02)^3
A = 5000 * 1.0608
A = 5304.40
So, Amanda's investment will be worth $5304.40 at the end of three years.