These are sample practice MCQs created for exam preparation. These are NOT official exam questions.
An investment of $5,000 earns 8% interest compounded annually. What is the value after 2 years?
Question:
An investment of $5,000 earns 8% interest compounded annually. What is the value after 2 years?
An investment of $5,000 earns 8% interest compounded annually. What is the value after 2 years?
Options
Answer: (D) $5,832
Explanation:
After 1 year: $5,000 × 1.08 = $5,400. After 2 years: $5,400 × 1.08 = $5,832. Or using formula: A = P(1+r)^t = 5,000(1.08)² = 5,000(1.1664) = $5,832.
Explanation:
After 1 year: $5,000 × 1.08 = $5,400. After 2 years: $5,400 × 1.08 = $5,832. Or using formula: A = P(1+r)^t = 5,000(1.08)² = 5,000(1.1664) = $5,832.
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