SOLUTION: if $2,000 is invested at 7% compounded (A) annually (B) quarterly (C) monthly what is the amount after 5 years? How much interest is earned? Please show the steps taken

Question 758757: if $2,000 is invested at 7% compounded
(A) annually (B) quarterly (C) monthly
what is the amount after 5 years? How much interest is earned?
Please show the steps taken to get the answers, so I can better understand how to solce future problems such as this.
Thanks
Answer by lwsshak3(11628) (Show Source): You can put this solution on YOUR website!
if $2,000 is invested at 7% compounded
(A) annually (B) quarterly (C) monthly
what is the amount after 5 years? How much interest is earned?
***
compound interest formula: A=P(1+i)^n, P=initial investment, i=interest rate per period, n=number of periods, A=amount after n years.
..
For annual compounding:
P=2000
i=7%/1=0.07
n=5*1=5
A=2000(1+.07)^5
A=2000(1.07)^5
A=2000(1.4026)=$2805
..
For quarterly compounding:
P=2000
i=7%/4=0.0175
n=5*4=20
A=2000(1+.0175)^20
A=2000(1.0175)^20
A=2000(1.1448)=$2830
..
For monthly compounding:
P=2000
i=7%/12=0.005833
n=5*12=60
A=2000(1+.005833)^60
A=2000(1.005833)^60
A=2000(1.4176)=$2835
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