A company invests $10,000 at 7% compounded annually. At the end of the second year, the company should have $11,400 in the fund.
$10,000 + ($10,000 * 7%) + [($10,000 + ($10,000 * 7%)) * 7%] = $11,449 or
$10,000 * 1.07 * 1.07 = $11,449

Question

Quizplus · Accepted Answer

The correct calculation using the formula for compound interest would be:

$10,000 * 1.07^2 = $11,449.

So the answer should be B, not A.

A Company Invests $10,000 at 7% Compounded Annually