Question

mrs. lara started a college fund on her child's 5th birthday . she deposited $9,500 into a cd account that yields an interest rate of 0.25% compounded annually. how much will the cd be worth when her child turns 18 years old?

Answer 1

$9,813.42

Explanation:

0.25% is added to 100% of the account value each year, so each year the account value is multiplied by 100.25% = 1.0025. This happens for 13 years, so the final account value is ...

$9500×1.0025^13 ≈ $9,813.42