Question

Robert deposits $4,300 into a 1-year CD at a rate of 2.3%, compounded daily. How much interest does she earn, to the nearest cent?

Answer 1

Here,

P = 4300

r = 2.3%=0.023

t = 1 year

n= 365 (as compounded daily for one year)

Therefore, we have

$\begin{gathered} A=P(1+\frac{r}{n})^{nt} \\ =4300\times(1+\frac{0.023}{365})^{365} \\ =4400 \end{gathered}$

Therefore the interest is, 4400-4300=1000.