Jill deposited $2,500 in a savings account at a rate of 7.75%,
compounded monthly. How much was in her account after three months?
a. $2548.44
b. $2548.76
c. $48.76
d. $38.44
We can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = final amount
P = principal (initial amount)
r = annual interest rate (as a decimal)
n = number of times interest is compounded per year
t = time in years
We are given:
P = $2,500
r = 7.75% = 0.0775 (as a decimal)
n = 12 (compounded monthly)
t = 3 months = 0.25 years
Plugging in these values, we get:
A = $2,500(1 + 0.0775/12)^(12*0.25)
= $2,548.44
Therefore, the answer is (a) $2,548.44.