Explanation
The question wants us to determine the amount $2400 will yield after 7 years if compounded annually at a rate of 8.75%
To do so, we will use the formula:
[tex]\begin{gathered} A=P(1+r)^t \\ where \\ P=\text{ \$2400} \\ r=8.75\text{ \%=}\frac{8.75}{100}=0.0875 \\ t=7 \end{gathered}[/tex]Thus, if we substitute the values above we will have
[tex]\begin{gathered} A=\text{ \$}2400(1+0.0875)^7 \\ A=\text{ }\$2400\lparen1.0875\rparen^7 \\ A=\text{ \$2400}\times1.79889 \\ A=\text{ \$4317.34} \end{gathered}[/tex]Therefore, after 7 years, the investment will be worth $4317.34
