Answer: $2169.86
Explanation:
1. The annual interest rate is 18%, so the monthly interest rate is 18% / 12 = 1.5%.
2. Convert the percentage to a decimal by dividing by 100, so 1.5% becomes 0.015.
3. The formula for compound interest is A = P(1 + r/n)^(nt), where:
- A is the amount of money accumulated after n years, including interest.
- P is the principal amount (the initial amount of money).
- r is the annual interest rate (in decimal form).
- n is the number of times that interest is compounded per year.
- t is the time the money is invested for, in years.
4. In this case, P = $2000, r = 0.015 (monthly rate), n = 1 (compounded monthly), and t = 3/12 (three months).
5. Substituting these values into the formula gives: A = 2000(1 + 0.015)^3
6. Calculating this gives: A = $2169.86