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Assume that you purchase a 6-year, 8% certificate of deposit for $1,000. If interest is compounded annually, what will be the value of the certificate when it matures
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14 votes
14 votes
Assume that you purchase a 6-year, 8% certificate of deposit for $1,000. If interest is compounded annually, what will be the value of the certificate when it matures

User Palswim
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1 Answer

5 votes
5 votes

Answer:

$ 1,586.8743

Step-by-step explanation:

Calculation to determine what will be the value of the certificate when it matures

Compounded annually

Principal P= 1000

Rate r=0.08

Period n = 6

Using this formula

A = P (1+r)^n

Let plug in the formula

1000 (1.08)^6

= 1586.8743

Therefore what will be the value of the certificate when it matures is $1586.8743

User Jelphy
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2.5k points
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