Question

Suppose you found a CD that pays 2.9 % interest compounded monthly for 4 years. If you deposit $ 10,000 now, how much will you have in the account in 4 years? (Round to the nearest cent.)

Answer 1

The value of the CD after 4 years will be approximately $11,191.44.

Step-by-step explanation:

To calculate the value of the CD after 4 years, we can use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the final amount, P is the principal amount (initial deposit), 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 = $10,000, r = 0.029 (2.9% as a decimal), n = 12 (monthly compounding), and t = 4. Plugging these values into the formula, we have A = $10,000(1 + 0.029/12)^(12*4). Calculating this gives us A ≈ $11,191.44.