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37 votes
An investment of 4000 earns 2% interest compounded annually. what will be the value of the investment in 7 years?

User Luke Wyatt
by
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2 Answers

14 votes
14 votes

Answer:

$4594.74

Explanation:

we will use the compound interest to solve-

a=p(1+r)^t

a=final number

p=principal balance (initial)**without interest**

r=interest rate

t=the amount of time

p=$4000

t= 7yrs

r=2%=0.02

we need to turn 2% into a decimal, to do that you divide 2 by 100 which is 0.02

now we rewrite the equation-

a=4000(1+0.02)^7

a=4000*1.1486

the answer is

$4594.74

good luck :)

i hope this helps

have a nice day !!

User Penguinsource
by
2.8k points
23 votes
23 votes
4,560


Because 2% of 4,000 is 80. 80 times 7 plus the original 4,000 equals 4,560
User Loring
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2.7k points