If a bank will pay 15% interest compounded annually on a $1,000 deposit today, the depositor will receive how much at the end of 2 years?

Question

Quizplus · Accepted Answer

Using the formula for compound interest: 
A = P(1 + r/n)^(n*t)
where A is the final amount, P is the principal amount, r is the annual interest rate, n is the number of times the interest is compounded per year, and t is the time in years.

Plugging in the given values:
A = $1,000(1 + 0.15/1)^(1*2)
A = $1,322.50

Therefore, the depositor will receive $1,322.50 at the end of 2 years. The correct answer is C.

If a Bank Will Pay 15% Interest Compounded Annually on a $1,000