Question

Mark invests Rs. $6500$ in a savings account his annual interest rate is $7\%$ compounded annually. What is the approximate balance of his savings account after $2\frac{1}{2}$?

• A. $6500$
• B. $5500$
• C. $7700$
• D. $8200$

Answer 1

The correct option is C $7700$

We know the formula,
$A=P{(1+\frac{r}{n})}^{n.t}$
Where,
$A=$ total amount
$P=$ principal or amount of money deposited,
$r=$ annual interest rate
$n=$ number of times compounded per year
$t=$ time in years
Given: $P=$ Rs. $6500,r=7\%,n=1$ and $t=$ $2\frac{1}{2}$ years
$\Rightarrow A=6500{(1+\frac{0.07}{1})}^{1\times 2.5}$
$\Rightarrow A=6500\times {1.07}^{2.5}$
$\Rightarrow A=6500\times 1.184294$
$\Rightarrow A=$ Rs. $7697.91$ $\text{approx}$ $7700$