Question

Sophia puts $250 in the bank with a 2.5% annual interest rate compounded monthly. If Sophia does not touch his money, how much money will she have after four years? A) $260.00 B) $275.00 C) $275.95 D) $276.26

Answer 1

D) $276.26

Explanation:

Deposited amount initially (P) = $250.

Rate of interest(r) = 2.5% compounded monthly = 0.025

Number of years (t) = 4.

Number of months in an year (n) = 12.

Formula for compound interest:

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

Plugging values in formula, we get

`A= 250(1+(0.025)/(12))^(12* 4)`

`A= 250(1.00208)^(48)`

`A= 250* \:1.10506`

A=276.26.

Therefore, correct option is D) $276.26.