How Much Interest Is Earned in the Third Year on a $1,000

question 67

Multiple Choice

How much interest is earned in the third year on a $1,000 deposit that earns 7 percent interest compounded annually?

• A)$70.00
• B)$80.14
• C)$105.62
• D)$140.00 100 x (1.07)² = $1,144.90 after 2 years.

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Definitions:

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, detailing revenues, expenses, and net income.

Incurred

Refers to a cost that has been realized or a liability that has been acquired during a specific period.

Statement of Cash Flows

An overview of a company's cash transactions, detailing money coming in from operational efforts and investment activities, and money going out to cover the costs associated with these activities during a specific period.

Reliable

The quality of being consistently accurate and dependable, often used to describe data, methods, or instruments that yield similar results across repeated trials.