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

question 90

Multiple Choice

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.

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Definitions:

Interest

The payment required for obtaining the service of borrowing funds, typically denoted as a yearly percentage rate.

Interest Rate

The proportion of interest charged to a borrower by a lender for the use of borrowed money.

Investment

The operation of earmarking financial resources with the hope of obtaining a return or profit.

Simple Interest

A method of calculating interest where the interest charge is based on the original principal only, not on the accumulated interest.