Question

Colin received a bonus check for 2,500. He is going to deposit the money into his bank account that receives 5.5% compounded annually. What is Colin's account balance after 5 years?

A. $2,637.50
B. $6,327.50
C. $3,267.40
D. None of these choices

Answer 1

amount = 2500(1 + 0.055)^5 = $3267.40

C

Answer 2

The amount Collin receives $3267.40 after 5 years .

Option C is correct.

Explanation:

Formula

`Amout = P (1 + r) ^(t)`

Where P is the principle , r is the rate of interest in the decimal form and t is the time .

As given

Colin received a bonus check for 2,500.

Collin is going to deposit the money into his bank account that receives 5.5% compounded annually for 5 years .

P = $2500

5.5% is written in the decimal form

`= (5.5)/(100)`

= 0.055

r = 0.055

t = 5 years

Put all the values in the above formula

`Amout =2500 (1 + 0.055) ^(5)`

`Amout =2500 (1 + 0.055) ^(5)`

`Amout =2500 (1.055) ^(5)`

`Amout =2500* 1.30696`

Amount = $3267.40

Therefore the amount Collin receives $3267.40 after 5 years .

Option C is correct .