If you invest $2,000 today at 9% compounded interest for two years, the value of the investment to the nearest dollar at the end of the two years will be:
A) $2,376
B) $2,360
C) $2,180.
D) $1,640.
E) $1,624.

Question

Quizplus · Accepted Answer

The value of the investment can be calculated using the formula for compound interest: A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount ($2,000), r is the annual interest rate (9% or 0.09), n is the number of times that interest is compounded per year, and t is the time the money is invested for in years. Assuming the interest is compounded annually (n=1), the formula simplifies to A = 2000(1 + 0.09)^2 = $2,376 to the nearest dollar.

If You Invest $2,000 Today at 9% Compounded Interest for Two