Question

Mr. Wilkins deposited $2,500 in a new account at his bank. • The bank pays 6.5% interest compounded annually on this account. • Mr. Wilkins makes no additional deposits or withdrawals. Which amount is closest to the balance of the account at the end of 2 years? A) $2,835.56 B) $2,513.00 C) $2,662.50 D) $2,825.00

Answer 1

D) $2,825.00

Explanation:

Answer 2

Option A.
`\$2,835.56`

Explanation:

we know that

The compound interest formula is equal to

`A=P(1+(r)/(n))^(nt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

`t=2\ years\\ P=\$2,500\\ r=0.065\\n=1`

substitute in the formula above

`A=\$2,500(1+(0.065)/(1))^(1*2)=\$2,835.56`