Let:
P be the initial amount of money called the
Principal,
compounded n times a year, with an r annual interest rate, then after
t many years, the amount of money A is given by the formula:
[tex]A=P(1+ \frac{r}{n} )^{nt} [/tex]
Remark
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r is generally a percentage like 3%, 7% etc and
are applied in the formula as 0.03, 0.07...,
the interest is compounded generally annually (n=1), quarterly (n=4),
monthly (n=12), etc...
t is in years,
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Thus, in our problem, P=$2,000, r=6.2%=0.062, n=4,
t=5
Applying the formula:
[tex]A=P(1+ \frac{r}{n} )^{nt} [/tex]
[tex]A=2,000* (1+ \frac{0.062}{4}
)^{4*5}=2,000(1.0155)^{20} [/tex]
[tex]=2,000*1.3602=2720.4[/tex]
2720.4-2000=720.4 ($)
Answer:
c.
