Question

Calculate the maturity value of a certificate of deposit if the interest is compounded quarterly. Round your answer to the nearest cent.

Principal = $20,000, rate = 4%, time = 6 years

A. $24,822.53
B. $26,418.72
C. $23,897.13
D. $21,387.44

Answer 1

To calculate the maturity value of a certificate of deposit with quarterly compounding interest, use the formula Maturity Value = Principal *(1 + (Rate/Number of compounding periods))^(Number of compounding periods * Time). Plugging in the given values, the maturity value is $26,418.72.

Step-by-step explanation:

To calculate the maturity value of a certificate of deposit with quarterly compounding interest, you can use the formula:

Maturity Value = Principal *(1 + (Rate/Number of compounding periods))^(Number of compounding periods * Time)

Plugging in the given values, we have:

Maturity Value = $20,000 * (1 + (0.04/4))^(4 * 6) = $26,418.72

Rounding to the nearest cent, the maturity value of the certificate of deposit is $26,418.72. Therefore, the correct answer is B. $26,418.72.