Question

Mr. Wilkins deposited $2,500 in a new account at his bank.

Answer 1

$2835.56 is the closest amount to the balance of the account at the

end of 2 years

Step-by-step explanation:

The formula for compound interest, including principal sum is

$A=P(1+\frac{r}{n})^{nt}$ where:

• A is the future value of the investment/loan, including interest
• P is the principal investment amount (the initial deposit or loan amount)
• r is the annual interest rate (decimal)
• n is the number of times that interest is compounded per unit t
• t is the time the money is invested or borrowed for

Mr. Wilkins deposited $2,500 in a new account at his bank.  

The bank pays 6.5% interest compounded annually on this account.

Mr. Wilkins makes no additional deposits or withdrawals

We need to find the closest amount to the balance of the account at

the end of 2 years

∵ P = $2,500

∵ r = 6.5% = (6.5/100) = 0.065

∵ n = 1 ⇒ compounded annually

∵ t = 2

Substitute all of these value in the formula above to find A

∵ $A=2,500(1+\frac{0.065}{1})^{(1)(2)}$

∴ $A=2,500(1.065)^{2}$

∴ A = $2835.56

$2835.56 is the closest amount to the balance of the account at the

end of 2 years

Learn more:

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