Question

James put $1000 in a 2-year CD paying 7% interest, compounded monthly.

Answer 1

To find the future value of this investment the formula is
A=p (1+r/k)^kt
A future value?
P present value 1000
R interest rate 0.07
K compounded monthly 12
T time 2 years
A=1,000×(1+0.07÷12)^(12×2)
A=1,149.81

Answer 2

Answer with explanation:

Principal = $ 1000

Time = 2 years

Rate of Interest = 7 %

Since of rate of interest is compounded monthly,

then,
`R=(7)/(12)\\\\T=2 * 12 =24`

Amount after 2 years

`=P* [1 +(R)/(100)]^T\\\\=1000 * [1+(7)/(1200)]^(24)\\\\=1000 * [(1207)/(1200)]^(24)\\\\=1000 * (1.00583)^(24)\\\\=1000* 1.14972\\\\=1149.72`

Amount after 2 years, when rate of interest, is compounded monthly=$ 1149.72