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?

Question

Quizplus · Accepted Answer

We will use the formula for compound interest:

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

where:
A = the amount at the end
P = the principal (initial deposit)
r = the interest rate as a decimal
n = the number of times per year the interest is compounded
t = the number of years

In this question, we have:
P = $1,500
r = 8% = 0.08
n = 4 (compounded quarterly)
t = 5 years

So, plugging in the values:

A = $1,500(1 + 0.08/4)^(4*5)
A = $2,228.92

Therefore, the answer is C, $2,228.92.

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