To find the amount of money that the principal will earn after 6 years with an interest rate of 2.25%, compounded quarterly, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the final amount in the account
P = the principal amount
r = the annual interest rate (expressed as a decimal)
n = the number of times the interest is compounded per year
t = the number of years
In this case:
P = $700
r = 2.25% = 0.0225
n = 4 (compounded quarterly)
t = 6 years
Plugging in the values into the formula, we have:
A = $700(1 + 0.0225/4)^(4*6)
A = $700(1 + 0.005625)^(24)
A = $700(1.005625)^(24)
A ≈ $799.98
Therefore, the correct answer is option a) $799.98.
$700 principal earning 2.25%, compounded quarterly, after 6 years
a
$799.98
b
$17,178.00
c
$723.96
d
$800.87
1 answer
2 answers