Since $7,000 is to be invested once at the starting of the period , therefore we shall use the following formula for compounding purpose:
Amount = Principal(1+r)^t
where r is the interest for the period
and t is the number of time periods.
In the question we have to find the amount when:
Principal is $7,000
r is 2/12 = 0.167% or 0.00167 (Since APR is 2% , to calculate monthly rate we shall divide the rate by 12)
t is 11 years* 12 = 132 periods( In 11 years it will be compounded every month thus total number of compiunding periods would be obtained by multiplying by 12)
Therefore ,
Amount = $7,000*[(1+0.00167)^132]
= $7,000 * 1.246396
= $8724.772
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