Question

An investment of 4,000 earns 2% interest compounded annually. What will be value of the investment in 7 years

Answer 1

Start with your exponetial growth formula: y = a(1 + r)^t.

Now, a is going to be your initial amount, r is the rate, and t is the time.

So we have y = $4,000(1 + .02)^7.

Now simplify inside the parenthses first.

So we have y = $4,000(1.02)^7.

Simplifying further gives us y = $4,000(1.14868).

Now use a calculator to get y = $4,594.72