Question

April decided to deposit $7,000 into a CD that offers her an APR of 5.2 percent with quarterly compounding for 5 years. How much money will she have in this CD when it matures in 5 years? (Round to the nearest dollar).

Answer 1

April will have approximately $8,524.42 in the CD when it matures in 5 years.

Step-by-step explanation:

To calculate the amount of money April will have in the CD after 5 years, we can use the formula for compound interest:

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

Where:
A = the final amount
P = the principal amount (initial deposit)
r = annual interest rate (as a decimal)
n = number of times interest is compounded per year
t = number of years

Using the given values:
P = $7,000
r = 0.052 (5.2% as a decimal)
n = 4 (quarterly compounding)
t = 5 years

Plug these values into the formula and calculate the final amount:

A = $7,000(1 + 0.052/4)^(4*5)

Calculating this expression, we find that April will have approximately $8,524.42 in the CD when it matures in 5 years.