You have deposited £1,500 in an account that promises to pay 8% compounded quarterly for the next ﬁve years.How much will you have in the account at the end?

Question

Quizplus · Accepted Answer

The formula for compound interest is:

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

Where:

A = the amount of money at the end of the investment period
P = the principal amount (the initial deposit)
r = the annual interest rate (as a decimal)
n = the number of times the interest is compounded per year
t = the number of years

Plugging in the given values:

A = 1500(1 + 0.08/4)^(4*5)
A = £2,228.92

Therefore, the correct answer is option C (£2,228.92).

You Have Deposited £1,500 in an Account That Promises to Pay