If you deposit $250 each quarter in a bank account that pays interest at 16% compounded quarterly, how much will you have at the end of five years?
A)$3397.58
B)$1354.08
C)$7444.53
D)$6074.25

Question

Quizplus · Accepted Answer

Using the formula for compound interest, we can calculate the amount accumulated after 5 years:

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

where A is the amount accumulated, P is the quarterly deposit amount ($250), r is the annual interest rate (16%), n is the number of times interest is compounded per year (4), and t is the number of years (5).

Plugging in the numbers, we get:

A = 250(1 + 0.16/4)^(4*5) 
A = $7444.53

Therefore, the best choice is C, which corresponds to $7444.53.

If You Deposit $250 Each Quarter in a Bank Account