You invest $10 000 at 5% interest rate compounded monthly, what is your accumulated interest at the end of year 2?
A)$511.62
B)$537.79
C)$1 025.00
D)$1 049.41
E)$1 089.41

Question

Quizplus · Accepted Answer

The formula for compound interest is A = P(1 + r/n)^(nt), where P is the principal amount ($10,000), r is the annual interest rate (0.05), n is the number of times interest is compounded per year (12), and t is the time in years (2). The accumulated amount A is $11,049.41, so the interest is $11,049.41 - $10,000 = $1,049.41.

You Invest $10 000 at 5% Interest Rate Compounded Monthly