An investment of $2,000 is earning interest at the rate of 6.2% compounded quarterly over 5 years. Approximately how much interest is earned on the investment?

For quarterly compounding, there are 4 × 5 = 20 periods, and the interest rate per period is 0.062 ÷ 4 = 0.0155. The investment grows to about $2,000(1.0155)^20 = $2,720.37. Subtract the original $2,000 to find the interest: about $720.37, choice c.

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