Question

Amanda invests 5000 in a cd at an annual rate of 2%. What will her investment be worth at the end of three years?

I got 300 but I think it’s wrong so any help or feedback?

Answer 1

To calculate the value of the investment at the end of three years, use the formula for compound interest. With a $5,000 principal and 2% annual interest compounded annually, the investment will be worth $5,306.04.

Step-by-step explanation:

To calculate the value of the investment at the end of three years, we can use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the final amount, P is the principal (initial investment), r is the annual interest rate (as a decimal), n is the number of times interest is compounded per year, and t is the number of years.

In this case, the principal is $5,000, the annual interest rate is 2% (0.02 as a decimal), and the interest is compounded annually (n = 1). Plugging in these values into the formula, we get:

A = $5,000(1 + 0.02/1)^(1*3)

Simplifying the calculation:

A = $5,000(1 + 0.02)^3

A = $5,000(1.02)^3

A = $5,000(1.061208)

A = $5,306.04

Therefore, Amanda's investment will be worth $5,306.04 at the end of three years.

Answer 2

$5306.04

Step-by-step explanation:

Amanda is investing at a rate of 2% annually for 3 years, hence we will use the Future value formula here for the correct answer of the investment after a period of 3 years.

Future Value = Present value * (1 + interest)^years

Future value = 5000*(1+0.02)^3

Future Value: $5306.4

Hope this Helps, Good luck.