Question

Doris put $4000 in a 2-year CD paying 6% interest, compounded monthly. After 2 years,she withdrew all her money. What was the amount of the withdrawl?

Answer 1

A=4,000×(1+0.06÷12)^(12×2)
A=4,508.64

Answer 2

The amount of the withdrawal after 2 years will be $ 4508.64

Explanation:

Given : Doris put $ 4000 in a 2-year CD paying 6% interest, compounded monthly.

We have to find the amount of the withdrawal.

Since given the principal amount is $ 4000 for 2 years and

Rate is 6% = 0.06

Since, interest is calculated compounded monthly

so monthly interest rate is
`(6)/(1200)`

Using Formula for compound interest

`A=P(1+r)^n`

Where A is amount

r is interest rate

n is time period

Substitute, we have,

`A=4000\left(1+(6)/(1200)\right)^(\left(12\cdot2\right))`

Simplify, we have ,

A = 4508.64

Thus, The amount of the withdrawal after 2 years will be $ 4508.64