If a bank will pay 7% interest compounded annually on $2,500 deposited today, the depositor will receive how much at the end of 8 years?

Question

Quizplus · Accepted Answer

The correct answer is D. $4,295.47.The formula for compound interest is A = P(1 + r/n)^(nt), where A is the final amount, P is the principal (initial amount), r is the annual interest rate, n is the number of times per year that the interest is compounded, and t is the number of years.In this case, P = $2,500, r = 7%, n = 1 (compounded annually), and t = 8. Plugging these values into the formula, we get A = 2500(1 + 0.07/1)^(1*8) = $4,295.47.

If a Bank Will Pay 7% Interest Compounded Annually on $2,500