Question

on melissa's 6th birthday, she gets a $5000 CD that earns 3% interest, compounded semiannually. If the CD matures on her 10th birthday, how much money will be available?

Answer 1

$6734.50

Explanation:

Use the compound amount formula A = P(1 + r/n)^(nt), with n = 2, t = 10, P = $5000 and r = 0.03:

A = $5000(1 + 0.03/2)^(2*10), or

A = $5000(1.3469) = $6734.50