Suppose that $2000 is loaned at a rate of 7%, compounded quarterly. Assuming that no payments are made, find the amount owed after 7 years. Do not round any intermediate computations, and round your answer to the nearest cent.

Question

parthkohli · Answer

All right. 

7 years is supposed to be $7 \times 4 = 28$ quarters.

parthkohli · Answer

Now, $7\% = 0.7$

We can now use the continuous compounding formula.

parthkohli · Answer

$ \color{Black}{\Rightarrow 2000(1 + 0.07)^{28}}$

parthkohli · Answer

I meant $7\% = 0.07$.

parthkohli · Answer

Use your calculator to solve $2000 \times 1.07^{28}$.

anonymous · Answer

Would it be 13297.6767 ?

anonymous · Answer

There are 4 quarters in a year i.e 3 months is one quarter (1/4 of a year).

anonymous · Answer

2000*(1+.07/4)^28

anonymous · Answer

3250.83

anonymous · Answer

4*3*7=84% 
2000*84%=3680