Question

Marcus receives an inheritance of

$
14
,
000
$14,000. He decides to invest this money in a 11-year certificate of deposit (CD) that pays
4.0
%
4.0% interest compounded monthly. How much money will Marcus receive when he redeems the CD at the end of the 11 years? Marcus will receive
$
□
$□. (Round to the nearest cent.)

Answer 1

Marcus will receive approximately $21,271.26 when he redeems the CD at the end of 11 years.

Step-by-step explanation:

To calculate the value of Marcus' CD at the end of 11 years, we can use the formula for compound interest:

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

Where:

• A is the final amount
• P is the initial principal (the amount Marcus invested)
• r is the annual interest rate (4.0% = 0.04)
• n is the number of times interest is compounded per year (monthly = 12)
• t is the number of years (11)

Plugging in the values, we get:

A = $14,000(1 + 0.04/12)^(12*11)

A= $21,271.26

Therefore, the Marcus will receive approximately $21,271.26 when he redeems the CD at the end of 11 years.