The future value of $7,000 deposited today and compounded quarterly at a 16% annual interest rate for five years is
A) $14,724.
B) $14,702.
C) $8,517.
D) $15,338.

Question

Quizplus · Accepted Answer

The future value is calculated using the formula FV = P(1 + r/n)^(nt), where P is the principal amount ($7,000), r is the annual interest rate (0.16), n is the number of times interest is compounded per year (4 for quarterly), and t is the number of years (5). Plugging in these values gives FV = 7000(1 + 0.16/4)^(4*5) = $15,338.

The Future Value of $7,000 Deposited Today and Compounded Quarterly