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10 votes
Find the amount and compound interest

Ed Cure invested $2,000 at 5.5% interest compounded quarterly for 2 years.

User Carpemb
by
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2 Answers

7 votes

Final answer:

The total amount after 2 years with compound interest is $2,232.06, and the compound interest earned over the 2 years is $232.06.

Step-by-step explanation:

To find the amount and compound interest Ed Cure invested $2,000 at 5.5% interest compounded quarterly for 2 years, we need to use the formula for compound interest:

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

Where:

A = the future value of the investment/loan, including interest

P = the principal investment amount ($2,000)

r = the annual interest rate (decimal) (5.5%/100 = 0.055)

n = the number of times that interest is compounded per year (quarterly = 4)

t = the number of years the money is invested or borrowed for (2 years)

Now, we compute the future value:

A = $2,000(1 + 0.055/4)(4*2)

A = $2,000(1 + 0.01375)8

A = $2,000(1.01375)8

A = $2,000(1.116029)

A = $2,232.06

The total future amount with compound interest is $2,232.06. To find the compound interest, subtract the original principal from the total amount:

Compound Interest = A - P

Compound Interest = $2,232.06 - $2,000

Compound Interest = $232.06

The compound interest earned over the 2 years is $232.06.

User Matt Bannert
by
7.6k points
11 votes

Answer:

I think it would be the final balance is $ 2,231.99 and the total compound interest is $231.99 I hope that's right and it helps.

User Taleodor
by
7.9k points

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