You invest $3500 in a savings account that pays interest of 6.5% compounded quarterly. What is the value of your account after 2 years?

A) $6,998.87

B) $12,785.00

C) $7522.50

D) $3,981.74

the answer is A) 6998.87

Answer: D) $3,981.74

Step-by-step explanation:

We would apply the formula for determining compound interest which is expressed as

A = P (1+r/n) ^nt

Where

A = total amount in the account at the end of t years

r represents the interest rate.

n represents the periodic interval at which it was compounded.

P represents the principal or initial amount invested.

From the information given,

P = 3500

r = 6.5% = 6.5/100 = 0.065

n = 4 because it was compounded 4 times in a year.

t = 2 years

Therefore,.

A = 3500 (1+0.065/4) ^4 * 2

A = 3500 (1+0.01625) ^8

A = 3500 (1.01625) ^8

A = 3981.74