Question

$485 is deposited into a savings account that earns 3.25% compound interest for 6 years. How much is in the account at the end of 6 years?

Question 3 options:

$587.60


$94.58


$102.60


$579.58

Answer 1

$485 is deposited into a savings account. The total amount by the end of 6 years will be is $587.6 approximately. Option A is correct.

Solution:

Given, $485 is deposited into a savings account that earns 3.25% compound interest for 6 years.

We have to find how much is in the account at the end of 6 years?

Now, amount = $485, interest rate = 3.25%, time period = 6 years.

We know that, compound interest is given as,

`=\text {amount}\left(1+\frac{\text {interest rate}}{100}\right)^ { time period }`

`\begin{array}{l}{\text { Compound interest }=485 *\left(1+(3.25)/(100)\right)^(6)} \\\\ {=485 *(1+0.0325)^(6)} \\\\ {=485 * 1.0325^(6)} \\\\ {=485 * 1.211547} \\\\ {=587.6}\end{array}`

Hence, the total amount by the end of 6 years will be is $587.6 approximately. So option A is correct.