Question

An employee put $2,500.00 in a retirement account that offers 6% interest compounded annually. The employee makes no additional deposits or withdrawals, Which amount is closest to the interest the employee will have earned at the end of 5 years? O $750.00 O $3,250.00 $846.00 O $3,346.00

Answer 1

we have

`\begin{gathered} C=Ci(1+i)^n \\ C=2500(1+0.06)^5 \\ C=2500(1.06)^5 \\ C=3346 \end{gathered}`

then, interest is

`3346-2500=846`

answer: $846.00