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Suzette invested $250 in a 240-day term deposit at 2.75% p.a. What is the future value of the deposit?

a) $256.06
b) $257.50
c) $259.31
d) $261.20

User Svend
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1 Answer

3 votes

Final answer:

The future value of the deposit can be calculated using the formula for compound interest.

Step-by-step explanation:

The future value of the deposit can be calculated using the formula for compound interest:



FV = PV * (1 + r/n)^(n*t)



Where FV is the future value, PV is the present value, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years.



In this case, Suzette invested $250, so PV = $250, the interest rate is 2.75% or 0.0275, and the term is 240 days or 240/365 = 0.6575 years.



The future value of the deposit is:



FV = $250 * (1 + 0.0275/365)^(365*0.6575) = $259.31



Therefore, the correct answer is c) $259.31.

User Johannes Wiesner
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