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Find the interest for a six-year CD for $5000 at an interest rate of 4%, compounded annually.

User Bubly
by
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1 Answer

4 votes

Answer:

$1326.60

Explanation:

We can solve by using the compound interest formula

a=p(1+r/n)^(nt)

Let a be the final amount

let r be the interest rate

let n be the number of times per period

let t be the number of periods

let p be our starting amount

We plug in our information

a=5000(1+0.04/1)^6

We solve for a and get

$6326.60, rounding to the nearest cent

Since we are to find the interest, we subtract the new amount from our original amount

6326.60-5000=1326.60

Therefore, the interest was $1326.60

User Thurizas
by
4.3k points