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Suppose you buy a CD for $500 that earns 2.5% APR and is compounded quarterly. The CD matures in 3 years. How much will the CD be worth at maturity?
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4 votes
Suppose you buy a CD for $500 that earns 2.5% APR and is compounded quarterly. The CD matures in 3 years. How much will the CD be worth at maturity?

User Didier Sampaolo
by
6.3k points

1 Answer

4 votes
The formula is
A=p (1+r/k)^kt
A future value?
P present value 500
R interest rate 0.025
K compounded quarterly 4
T time 3years
A=500×(1+0.025÷4)^(4×3)
A=538.82
User Vishesh Mangla
by
6.7k points
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