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A principal of $2700 is invested at 6.25% interest, compounded annually. How much will the investment be worth after 13 years?
Use the calculator provided and round your answer to the nearest dollar.
$

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Answer:

$5938

General Formulas and Concepts:

Pre-Algebra

Order of Operations: BPEMDAS

  1. Brackets
  2. Parenthesis
  3. Exponents
  4. Multiplication
  5. Division
  6. Addition
  7. Subtraction
  • Left to Right

Algebra I

Compounded Interest Rate Formula: [tex]\displaystyle A = P(1 + \frac{r}{n})^{nt}[/tex]

  • P is principle amount
  • r is rate
  • n is compounded rate
  • t is time

Step-by-step explanation:

Step 1: Define

Identify variables

P = 2700

r = 6.25% = 0.0625

n = 1

t = 13

Step 2: Find Interest

  1. Substitute in variables [Compounded Interest Rate Formula]:                     [tex]\displaystyle A = 2700(1 + \frac{0.0625}{1})^{1 \cdot 13}[/tex]
  2. [Exponents] Multiply:                                                                                         [tex]\displaystyle A = 2700(1 + \frac{0.0625}{1})^{13}[/tex]
  3. (Parenthesis) Divide:                                                                                        [tex]\displaystyle A = 2700(1 + 0.0625)^{13}[/tex]
  4. (Parenthesis) Add:                                                                                            [tex]\displaystyle A = 2700(1.0625)^{13}[/tex]
  5. Evaluate exponents:                                                                                         [tex]\displaystyle A = 2700(2.19926)[/tex]
  6. Multiply:                                                                                                             [tex]\displaystyle A = 5938[/tex]

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