Answer:
We can use the formula for compound interest to solve the problem:
A = P(1 + r/n)^(nt)
where A is the final amount, P is the principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years.
In this case, we know that P = $2,000, A = $6,883.55, n = 4 (quarterly compounding), and t = 16. We can solve for r by rearranging the formula as follows:
r = n[(A/P)^(1/nt) - 1]
Substituting the values, we get:
r = 4[(6,883.55/2,000)^(1/(4*16)) - 1] = 0.0522 or 5.22%
Therefore, the annual interest rate is approximately 5.22%