An investor deposit $6100.00 in an investment account
The amount pays 3.1% interest, compounded annually
The investor leaves the money in the account for two years
The investor makes no additional deposits or withdrawals. What is the balance in the account at the end of the two years?
$6289.10
$6478.20
$6484.06
$6686.21
To calculate the balance in the account at the end of the two years, we can use the formula for compound interest:
A = P(1 + r)^n
Where:
A = the future value of the investment/loan
P = the principal investment amount (the initial deposit)
r = the annual interest rate (in decimal form)
n = the number of years the money is invested for
In this case, P = $6100, r = 0.031, and n = 2. Plugging those values into the formula:
A = $6100(1 + 0.031)^2
A = $6100(1.031)^2
A = $6100(1.062358)
A = $6484.06
Therefore, the balance in the account at the end of two years would be $6484.06.
So, the correct answer is:
$6484.06