You just deposited $2,500 in a bank account that pays a 4.0% annual interest rate, compounded quarterly. If you also add $5,000 to the account one year (4 quarters) from now and $7,500 to the account two years (8 quarters) from now, how much will be in the account three years (12 quarters) from now?

Question

Quizplus · Accepted Answer

The correct answer is A because the future value of the deposit is calculated using the formula FV = PV * (1 + r/n)^(nt), where PV is the present value, 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, the present value is $2,500, the annual interest rate is 4.0%, the interest is compounded quarterly (n = 4), and the number of years is 3. Plugging these values into the formula, we get FV = $2,500 * (1 + 0.04/4)^(4*3) = $15,234.08.

You Just Deposited $2,500 in a Bank Account That Pays