Question

Suppose that $2000 is invested at a rate of 3.6%, compounded monthly. Assuming that no withdrawals are made, find the total amount after 10 years. Do not round any intermediate computations, and round your answer to the nearest cent.

Answer 1

To find the total amount after 10 years, use the formula for compound interest. Plugging in the values, we find that the total amount is approximately $2,740.62.

Step-by-step explanation:

To find the total amount after 10 years, we can use the formula for compound interest:

A = P(1 + r/n)^(nt)

Where:

• A is the final amount
• P is the initial principal (in this case, $2000)
• r is the annual interest rate (3.6% in decimal form)
• n is the number of times interest is compounded per year (12 times monthly)
• t is the number of years (10 years in this case)

Plugging in the values, we get:

A = 2000(1 + 0.036/12)^(12*10)

Simplifying, we get:

A = 2000(1.003)^(120)

Calculating this, we find that the total amount after 10 years is approximately $2,740.62.