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A certificate of deposit earns 1% interest every three months. The interest is compounded.

What is the value of a $35,000 investment after 6 years?


$37,153.21

$39,438.88

$44,440.71

$56,295.30

User Zem
by
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2 Answers

4 votes
A certificate of deposit earns 1% interest every three months. The interest is compounded.


What is the value of a $35,000 investment after 6 years?


$37,153.21

$39,438.88

$44,440.71

$56,295.30

A. 37,153.21
User Irudaya Rajasekar
by
8.6k points
4 votes

Answer:

Option C.

Explanation:

The formula for amount after compound interest is


A=P(1+(r)/(n))^(nt)

where, P is principal, r is annual rate of interest, r/n is per period interest, n is number of time interest compounded in 1 year, t is number of years.

Given information:

Principle :
P=35000

Per period interest :
(r)/(n)=1\%=0.01

Number of time interest compounded in 1 year :
n=4

Number of years :
t=6

Using the formula we get


A=35000\left(1+0.01\right)^(\left(4\cdot6\right))


A=35000\left(1.01\right)^(\left(24\right))


A=44440.7126986


A\approx 44440.71

The value of a $35,000 investment after 6 years is $44,440.71.

Therefore, the correct option is C.

User Vivek Rajagopalan
by
7.6k points
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