You Decide to Deposit $3,000 at a Local Bank for Three

question 38

Multiple Choice

You decide to deposit $3,000 at a local bank for three years at a 5% rate of interest compounded quarterly. The future value of your investment is approximately equal to ________. (Use the formula method and round to the nearest dollar.

• A) $3,450
• B) $3,482
• C) $3,479
• D) $3,484

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Definitions:

Accrued Interest

Accrued interest is the interest on a loan or bond that has accumulated since the principal investment or last payment period but has not yet been paid.

Interest Expense

The cost incurred by an entity for borrowed funds, typically presented as an expense on the income statement.

Amortization

The process of spreading the cost of an intangible asset over its useful life.

Accrued Interest

Accrued Interest is the interest that has accumulated on a loan or bond since the last interest payment was made but has not yet been paid out.