Question

Suppose Maurice buys a CD for $400 that earns 2.5%APR is compound monthly . The CD matures in 3 years . How much will Maurice’s CD be worth at maturity

Answer 1

431.12

Explanation:

Answer 2

$431.11

Explanation:

To find how much the CD of Maurice will be after 3 years, we need to use the formula:

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

Now let's find all of our available variables.

P = $400

r = 2.5% or 0.025

t = 3 years

n = 12 months (Compounds monthly)

Now we can use the formula by substituting our values.

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

`A=400(1+(0.025)/(12))^(12(3))`

`A=400(1+0.002083)^(36)`

`A=400(1.002083)^(36)`

`A=400(1.077787)`

`A=431.11`

The CD of Maurice will be $431.11 after 3 years.