Question

The balance in Alex's bank account is $675. The account

earns 6% simple interest calculated twice per year. If Alex
makes no deposits or withdrawals for 2 full years, the
balance in his account (rounded to the nearest dollar) will
be -
Select one:
O
$852
$715
$837
$756

Answer 1

$852

Explanation:

From the given question, the following are given:

Present value, PV = $675

Rate, r = 6% = 0.06

Number of years, n = 2 years

Number of times per year, m = 2

The balance in his account is the future value (FV), so that;

Future value = PV
`(1+r)^(nm)`

= 675
`(1+0.06)^((2*2))`

= 675 x 1.26248

= 852.174

Future value = $852

Thus, the balance in Alex's account would be $852.