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3. Suppose you invest $2250 in a CD that earns 3% APR and is compounded

quarterly. The CD matures in 2 years. How much will this CD be worth at maturity?

User Cowan
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1 Answer

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The formula for compound interest is given by:

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

Where:

A = final amount

P = principal (initial amount)

r = annual interest rate (as a decimal)

n = number of times the interest is compounded per year

t = time (in years)

Using this formula, we can calculate the final amount of the CD as follows:

A = 2250(1 + 0.03/4)^(4*2)

A = 2250(1 + 0.0075)^8

A = 2250(1.0075)^8

A = 2250(1.063853)

A = $2398.12 (rounded to the nearest cent)

Therefore, the CD will be worth approximately $2398.12 at maturity.

User Tad Guski
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