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Myron put $5000 in a 2-year CD playing 3% interest, compounded monthly. After 2 years, he withrew all his money. What was the amount of the withdrawal?

1 Answer

6 votes

Answer:

$5308.79

Explanation:

The future value can be computed from ...

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

where P is the principal invested, r is the annual interest rate, n is the number of times per year it is compounded, and t is the number of years.

Filling in the given numbers, we have ...

FV = $5000(1 +.03/12)^(12·2) ≈ $5308.79

Myron's withdrawal will be in the amount of $5308.79.

User J Kao
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