Question

Gretchen invested $1000 in a certificate of deposit that paid interest at a rate of 9% per year. How much was the CD worth at the end of the 3 years?

Answer 1

The CD is worth approximately $1195.43 at the end of the 3 years.

Step-by-step explanation:

To calculate the value of the CD at the end of the 3 years, you can use the formula for compound interest:

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

• A = the final amount
• P = the principal amount (initial investment)
• r = the interest rate
• n = the number of times interest is compounded per year
• t = the number of years

Substituting the given values:

A = 1000(1 + 0.09/1)^(1*3)

Simplifying and solving:

A = 1000(1 + 0.09)^3

A = 1000(1.09)^3

A ≈ $1195.43

Therefore, the CD is worth approximately $1195.43 at the end of the 3 years.