Harry received a scholarship of $2,000. He plans to invest this money for 5 years at 8%, compounded annually. If he accomplishes this, what will Harry's ending balance be? (Round the answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

The ending balance can be calculated using the formula for compound interest: A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount ($2,000), r is the annual interest rate (8% or 0.08), n is the number of times that interest is compounded per year (1, since it's compounded annually), and t is the time the money is invested for (5 years). Plugging in the values: A = 2000(1 + 0.08/1)^(1*5) = 2000(1.08)^5 ≈ $2,938.62, which rounds to $2,939.

Harry Received a Scholarship of $2,000