Compound Interest can be defined as the interest that is compounded on a particular sum of money over a given period of time.
The balance at the end of that time is $2,001.60
The question wants us to find the balance at the end of that time which means we are to find the amount at the end of 10 years.
The formula for the compound interest is given as:
A = P(1 + r/n)^nt
Where:
A = Amount or the balance after time "t"
Principal(P) = $1,000
Interest rate(R) = 7%
Time(T) = 10 years
First, convert R as a percent to r as a decimal
r = R/100
r = 7/100
r = 0.07 rate per year
Then solve the equation for A
A = P(1 + r/n)^nt
A = 1,000.00(1 + 0.07/4)^(4 x 10)
A = 1,000.00(1 + 0.0175)^(40)
A = $2,001.60
Therefore, the balance at the end of that time is $2,001.60
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