Question

Joanne deposits $4,300 into a l-year CD at a rate of 2.3%, compounded daily.a. What is her ending balance after the year, to the nearest cent?b. How much interest does she earn, to the nearest cent?c. What is her annual percentage yield to the nearest hundredth of a

Answer 1

Joanne deposits $4,300 into a l-year CD at a rate of 2.3%, compounded daily.

a. What is her ending balance after the year, to the nearest cent?

b. How much interest does she earn, to the nearest cent?

c. What is her annual percentage yield to the nearest hundredth

Remember that

The compound interest formula is equal to

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

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

P=$4,300

t=1 year

r=2.3%=2.3/100=0.023

n=365

Part a

Find out the value of A

substitute the given values in the formula

`A=4,300(1+(0.023)/(365))^(365\cdot1)`

A=$4,400.04

Part b

I=A-P

I=4,400.04-4,300

I=$100.04

Part c

we have

4,300 -----> represent 100%

so

Applying proportion

Find out how much percentage is 4,400.04

100/4,300=x/4,400.04

x=(100/4,300)*4,400.04

x=102.33%

therefore

102.33-100=2.33%