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. Which amount is closest to the balance of the account at the end of 2 years? A) $2,835.56 B) $2,513.00 C) $2,662.50 D) $2,825.00

Accepted Solution

Answer:Option A. [tex]\$2,835.56[/tex]  Step-by-step explanation:we know that    The compound interest formula is equal to  [tex]A=P(1+\frac{r}{n})^{nt}[/tex]  where  A is the Final Investment Value  P is the Principal amount of money to be invested  r is the rate of interest  in decimal t is Number of Time Periods  n is the number of times interest is compounded per year in this problem we have  [tex]t=2\ years\\ P=\$2,500\\ r=0.065\\n=1[/tex]  substitute in the formula above  [tex]A=\$2,500(1+\frac{0.065}{1})^{1*2}=\$2,835.56[/tex]