The future value of $50,000 deposited today and compounded quarterly at an 8% annual interest rate for seven years is
A) $57,434.
B) $87,051.
C) $85,691.
D) $78,000.

Question

Quizplus · Accepted Answer

The future value of an investment is calculated using the formula FV = PV(1 + r/n)^(nt), where PV = present value, r = annual interest rate, n = number of times the interest is compounded per year, and t = time in years. For this question, PV = $50,000, r = 0.08, n = 4 (since interest is compounded quarterly), and t = 7. Plugging these values into the formula gives FV = $50,000(1 + 0.08/4)^(4*7) = $87,051.

The Future Value of $50,000 Deposited Today and Compounded Quarterly