Question

Sophia puts $250 in the bank with a 2.5% annual interest rate compounded monthly. If Sophia does not touch his money, how much money will she have after four years? A) $260.00 B) $275.00 C) $275.95 D) $276.26

Answer 1

Answer:

D) $276.26

Step-by-step explanation:

Deposited amount initially (P) = $250.

Rate of interest(r) = 2.5% compounded monthly = 0.025

Number of years (t) = 4.

Number of months in an year (n) = 12.

Formula for compound interest:

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

Plugging values in formula, we get

$A= 250(1+\frac{0.025}{12})^{12\times 4}$

$A= 250(1.00208)^{48}$

$A= 250\times \:1.10506$

A=276.26.

Therefore, correct option is  D) $276.26.