Find the balance in the account.
$700 principal earning 2.25%, compounded quarterly, after 6 years
a
$799.98
b
$800.87
c
$723.96
d
$17,178.00
To find the balance in the account after 6 years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the final balance
P = the principal amount ($700)
r = the interest rate (2.25% or 0.0225 as a decimal)
n = the number of times the interest is compounded per year (quarterly means 4 times a year)
t = the number of years (6 years)
Plugging in these values into the formula, we get:
A = $700(1 + 0.0225/4)^(4*6)
A = $700(1.005625)^(24)
A = $700(1.148698355)
A ≈ $802.09
Therefore, the closest answer choice is b) $800.87.