Final answer:
The balance on a CD with an initial investment of $500 at a 3% interest rate compounded annually would be $530.45 after two years.
Step-by-step explanation:
The balance after two years on a CD with an initial investment of $500 at a 3% interest rate can be calculated using the formula for compound interest.
The compound interest formula is A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount (the initial amount of money), r is the annual interest rate (decimal), n is the number of times that interest is compounded per year, and t is the time the money is invested for in years.
Assuming that interest is compounded annually (n=1), the balance after two years (t=2) would be calculated as follows:
A = 500(1 + 0.03/1)^(1*2)
= 500(1.03)^2
Calculating this, we get:
A = 500 * 1.0609
= $530.45
Therefore, the balance after two years on this CD with an initial investment of $500 at a 3% interest rate is $530.45.