Question

if Olivia opens a CD with $2,700 earning interest at 1.2% compounded quarterly what will the value of the CD be in 5 years

Answer 1

Solution

For this case we can use the compounded interest formula given by:

$A=P(1+\frac{r}{n})^{nt}$

For this situation A= 2700, r = 0.012 and n = 4 and t=5 and we have:

$A=2700(1+\frac{0.012}{4})^{4\cdot5}=2866.701$