You put $2,000 in an IRA account at Northern Trust. This account pays a fixed interest rate of 8% compounded quarterly. How much money do you have in five years?
A) $2,914
B) $2,938
C) $2,972
D) $2,999

Question

Quizplus · Accepted Answer

The formula for compound interest is A = P(1 + r/n)^(nt). Here, P = $2,000, r = 0.08, n = 4, t = 5. Plugging in these values gives A = 2000(1 + 0.08/4)^(4*5) = $2,972.

You Put $2,000 in an IRA Account at Northern Trust