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?
A) $1,598.33
B) $2,228.92
C) $2,203.99
D) $6,991.44

Question

Quizplus · Accepted Answer

The correct answer is found using the formula for compound interest: A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount ($1,500), r is the annual interest rate (8% or 0.08), n is the number of times that interest is compounded per year (quarterly, so 4 times), and t is the time the money is invested for (5 years). Plugging in the values: A = 1500(1 + 0.08/4)^(4*5) = $2,228.92.

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