Question

zoe invested $7,300 in an account paying an interest rate of 3.5% compounded annually. assuming no deposits or withdrawals are made, how much money, to the nearest ten dollars, would be in the account after 20 years?

Explanation:

Step1: Recall compound interest formula

The formula for annual compound interest is $A = P(1 + r)^t$, where:

• $A$ = final amount
• $P$ = principal amount
• $r$ = annual interest rate (decimal)
• $t$ = time in years

Step2: Convert rate to decimal

$r = \frac{3.5\%}{100} = 0.035$

Step3: Plug in values to formula

Substitute $P=7300$, $r=0.035$, $t=20$:
$A = 7300(1 + 0.035)^{20}$

Step4: Calculate the growth factor

First compute $(1.035)^{20} \approx 1.98978886$

Step5: Compute final amount

$A \approx 7300 \times 1.98978886 \approx 14525.46$

Step6: Round to nearest ten dollars

$14525.46$ rounded to the nearest ten is $14530$

Answer:

$\$14,530$