You decide to deposit $2,000 at a local bank for two years at a 7% rate of interest compounded annually.What is the future value of your investment?
A)$2,014
B)$2,028
C)$2,280
D)$2,290

Question

Quizplus · Accepted Answer

The future value of the investment can be calculated using the formula FV = P(1+r)^n, where P is the principal, r is the rate of interest as a decimal, and n is the number of compounding periods. In this case, P = $2,000, r = 0.07, and n = 2 (since it's compounded annually over two years). Substituting these values into the formula, we get FV = 2000(1+0.07)^2 = $2,289.80. The closest answer choice is D, $2,290.

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