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?
A $587.60
B $102.60
C $579.58
D$94.58

Answer 1

$587.60 will be in the account at the end of 6 years.

Solution:

Given that $ 485 is deposited into savings account

Interest earned is 3.25 % Compound Interest for years

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

Compound Interest is given as:

`A=P\left(1+\left((r)/(n)\right)\right)^(n t)`

Where: A = Amount after compound interest

P = Principal/Base Amount

r = rate of compound interest

n = no. of times interest applied

t = time period

By substituting the values in the above formula, we can calculate the amount.

`\text { Therefore, } A=485\left(1+\left((3.25)/(1)\right)\right)^(6)`

`A=485(1+3.25)^(6)=587.60`

Hence the amount at the end of 6 years is $ 587.60. Hence Option A is correct