Compound interest formula: If $1000 is invested at 5% annually compounded, what is the value after 2 years?

A $1100

B $1102.50

C $1050

D $1105

✓ Correct Answer: Option B

A = P(1+r)^t = 1000(1.05)² = 1000(1.1025) = $1102.50.

💡 Why is B) the correct answer?

The correct answer to the question "Compound interest formula: If $1000 is invested at 5% annually compounded, what is the value after 2 years?" is Option B: $1102.50.

The other options — A) $1100, C) $1050, D) $1105 — are incorrect for this PCAT Exam Prep question. As explained above: A = P(1+r)^t = 1000(1.05)² = 1000(1.1025) = $1102.50.

📚 About This PCAT Exam Prep Practice Question

This 2-level PCAT Exam Prep question from the Quantitative Reasoning topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free PCAT Exam Prep practice test or use flashcards for spaced repetition review.

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Compound interest formula: If $1000 is invested at 5% annually compounded, what is the value after 2 years?

✓ Correct Answer: Option B

📚 About This PCAT Exam Prep Practice Question

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