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Bob invested $11,000 in a CD paying 3.5% APR, compounded each month.How much money will it be worth after 10 years?

User Joe Gatt
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1 Answer

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Final answer:

The value of the CD after 10 years of investment will be approximately $15,441.86.

Step-by-step explanation:

To calculate the future value of the CD, we can use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the future value, P is the principal amount, r is the annual interest rate as a decimal, n is the number of times interest is compounded per year, and t is the number of years. In this case, P is $11,000, r is 3.5% or 0.035, n is 12 (compounded monthly), and t is 10 years. Plugging these values into the formula, we have A = 11000(1 + 0.035/12)^(12*10).

Simplifying the expression inside the parentheses, we get A = 11000(1.002917)^120. Using a calculator or spreadsheet software, we can find that the value inside the parentheses is approximately 1.403806. Multiplying this value by the principal amount, we find that the future value of the CD after 10 years is approximately $15,441.86.

User KyleLib
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