Question

A recent high school graduate received $ 600 in gifts of cash from friends and relatives . In addition , he received three scholarships in the amounts of $ 250 , $ 400 , and $ 1400 . If he takes all his gift and scholarship money and invests it in a 36 - month CD paying 1 % interest compounded daily , how much will the graduate have when he cashes in the CD at the end of the 36 - months ?

Answer 1

The high school graduate will have $2,787.17 when they cash in the CD at the end of the 36 months.

Explanation:

The total amount of money the high school graduate received is:

$600 + $250 + $400 + $1400 = $2650

If this entire amount is invested in a 36-month CD paying 1% interest compounded daily, we can use the formula:

A = P(1 + r/n)^(nt)

Where:

- A is the amount of money the graduate will have after 36 months

- P is the initial amount invested ($2650)

- r is the annual interest rate (1%)

- n is the number of times the interest is compounded per year (365, since it is compounded daily)

- t is the number of years (3)

Plugging in the values, we get:

A = $2,787.17

Therefore, the high school graduate will have $2,787.17 when they cash in the CD at the end of the 36 months.