What Is the Compound Interest Earned on Josef's Principal of $2,750

question 45

Multiple Choice

What is the compound interest earned on Josef's principal of $2,750 at 8% interest compounded quarterly for 2 years? Round to the nearest cent after each calculation.

• A) $327.86
• B) $440.00
• C) $472.06
• D) $620.00

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Definitions:

Compounded Annually

Interest that is calculated and added to the principal once every year.

Compounded Quarterly

A compound interest calculation where the frequency of compounding is every three months, affecting the overall growth of an investment or debt.

Periodic Interest Rate

The rate of interest earned in one compounding period.

Payment Interval

The length of time between successive payments in an annuity.