Question

a principal of $2100 is invested at 7.25% interest, compounded annually. how much will the investment be worth after 8 years? use the calculator provided and round your answer to the nearest dollar.

Explanation:

Step1: Identify compound interest formula

The formula for compound interest is $A = P(1 + \frac{r}{n})^{nt}$, where $A$ = amount, $P$ = principal, $r$ = annual rate, $n$ = compounding periods/year, $t$ = years.

Step2: Plug in values

$P = 2100$, $r = 7.25\% = 0.0725$, $n = 1$ (annual compounding), $t = 8$. So $A = 2100(1 + 0.0725)^{8}$.

Step3: Calculate the term

First compute $1 + 0.0725 = 1.0725$. Then calculate $1.0725^8 \approx 1.7495$.

Step4: Find the final amount

Multiply by principal: $2100 \times 1.7495 \approx 3673.95$, rounded to nearest dollar is 3674.

Answer:

3674