Question

Doris put in $4000 in a 2-year CD paying 6% interest and being compounded monthly. What will her balance be after 2 years

Answer 1

$4,261.93

Step-by-step explanation:

It is the correct answer for the quiz. Full question by the way is "Doris put $4000 in a 5-year CD paying 6% interest compounded monthly. After 2 years, she withdrew all her money, and as an early withdrawal penalty, she paid back all interest she made during the first year. How much money was Doris left with?"

Answer 2

$4508.64

Step-by-step explanation:

The formula for calculating future value:

FV = P (1 + r/m)^mn

FV = Future value

P = Present value

R = interest rate

N = number of years

m = number of compounding = 12

$4000 x (1 + 0.06 /12)^(2 x 12)

$4000 x 1.005^24

= $4,508.64

4508.64