Question

Lori buys a $400 certificate deposit that earns 1.8% interest compounded monthly how much will a cd be worth in six years

Answer 1

$1445.11

Explanation:

The formula to use would be:

`F=P(1+r)^t`

Where

F is the future amount (what we want to find)

P is the present (principal) amount (this is 400)

r is the rate of interest, monthly (1.8% or 0.018)

t is the time in months (6 years = 6 * 12 = 72)

Now substituting, we get:

`F=P(1+r)^t\\F=400(1+0.018)^(72)\\F = 400(1.018)^(72)\\F=1445.11`

After 6 years, the CD will be worth $1445.11