Find the balance in the account.
$2,400 principal earning 2%, compound annually, after 7 years
The formula to calculate compound interest is:
A = P(1 + r/n)^(nt)
Where:
A = the amount of money accumulated after n years, including interest
P = the principal amount (the initial amount of money)
r = annual interest rate (decimal)
n = number of times that interest is compounded per year
t = number of years the money is invested for
Given:
P = $2,400
r = 2% or 0.02 (as a decimal)
n = 1 (compounded annually)
t = 7 years
Plugging in the values:
A = $2,400(1 + 0.02/1)^(1*7)
A = $2,400(1.02)^7
A = $2,400(1.161215176)
A = $2,791.71
Therefore, after 7 years, the balance in the account would be $2,791.71.