Question

Tara deposits $5,000 in a certificate of deposit. the annual interest rate is 7%, and the interest will be compounded quarterly. how much will the certificate be worth in 10 years?

Answer 1

Explanation:

You are going to use the compounding interest formula

FV = PV (1+i)^n

FV = future value PV = present value = $ 5000

i= decimal interest per period ( 4 period per year ) = .07/4

n = number of periods = 10 * 4 = 40

Plug in the numbers

FV = 5000(1 + ,07/4)^40 = $ 1007.99