Question

6. A certificate of deposit (CD) is a savings instrument that many banks offer. It usually gives a

higher interest rate, but you cannot access your investment for a specified length of time.
Suppose you deposit $3000 in a CD paying 6% interest, compounded monthly. How much will
you have in the account after 20 years?

Answer 1

`~~~~~~ \textit{Compound Interest Earned Amount} \\\\ A=P\left(1+(r)/(n)\right)^(nt) \quad \begin{cases} A=\textit{accumulated amount}\\ P=\textit{original amount deposited}\dotfill &\$3000\\ r=rate\to 6\%\to (6)/(100)\dotfill &0.06\\ n= \begin{array}{llll} \textit{times it compounds per year}\\ \textit{monthly, thus twelve} \end{array}\dotfill &12\\ t=years\dotfill &20 \end{cases} \\\\\\ A=3000\left(1+(0.06)/(12)\right)^(12\cdot 20) \implies A=3000(1.005)^(240)\implies A \approx 9930.61`