Question

You invest $3500 in a savings account that pays interest of 6.5% compounded quarterly. What is the value of your account after 2 years?
A) $6,998.87
B) $12,785.00
C) $7522.50
D) $3,981.74

Answer 1

Answer:

the answer is A) 6998.87

Answer 2

Answer: D) $3,981.74

Step-by-step explanation:

We would apply the formula for determining compound interest which is expressed as

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

Where

A = total amount in the account at the end of t years

r represents the interest rate.

n represents the periodic interval at which it was compounded.

P represents the principal or initial amount invested.

From the information given,

P = 3500

r = 6.5% = 6.5/100 = 0.065

n = 4 because it was compounded 4 times in a year.

t = 2 years

Therefore,.

A = 3500(1+0.065/4)^4 × 2

A = 3500(1+0.01625)^8

A = 3500(1.01625)^8

A = 3981.74