Suppose you buy a CD for $500 that earns 2.5% APR and is compounded quarterly. The CD matures in 3 years. How much will this CD be worth at

Question

Suppose you buy a CD for $500 that earns 2.5% APR and is compounded quarterly. The CD matures in 3 years. How much will this CD be worth at maturity?

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Raelynn 2 weeks 2021-09-13T12:13:46+00:00 1 Answer 0

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    2021-09-13T12:15:43+00:00

    Answer:

    A=$538.82

    Step-by-step explanation:

    We’re going to use the compounded interest formula:

    A=P(1+r/n)^n*t

    Where,

    A = the future value of the investment/loan, including interest

    P = the principal investment amount (the initial deposit or loan amount)

    r = the annual interest rate (decimal)

    n = the number of times that interest is compounded per unit t

    t = t is the amount of time at which you’re checking how much it’s worth (yrs)

    Using this information, we can use:

    A=500(1+0.025/4)^3*4

    A=500(1+0.00625)^12

    A=500(1.00625)^12

    A=500(1.07763259886)

    A=538.82

    A=$538.82….

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