Question

Suppose that $2000 is invested at a rate of 2.8%, compounded quarterly. Assuming that no withdrawals are made, find the total amount after 5 years.Do not round any intermediate computations, and round your answer to the nearest cent.

Answer 1

Given the amount invested, P; the rate, r, at which it was invested and the time, t, it was invested.

Thus,

`\begin{gathered} p=2000, \\ \\ r=2.8\text{ \%}=0.028 \\ \\ t=5 \end{gathered}`

Then, we would solve for the total amount, A, using the formula;

`\begin{gathered} A=P(1+(r)/(n))^(nt) \\ \\ Where; \\ n=4 \end{gathered}`

Thus;

`\begin{gathered} A=2000(1+(0.028)/(4))^((4)(5)) \\ \\ A=2000(1.007)^(20) \\ \\ A=2299.43 \end{gathered}`

ANSWER: $2,299.43