Question

Nazerhy deposits $8,000 in a certificate of deposit. The annual interest rate is 6%, and the interest will be compounded monthly. How much will the certificate be worth in 10 years?

Round your answer to the nearest cent.
Do NOT round until you calculate the final answer

Answer 1

14,512.15

Explanation:

Identify the values of each variable in the formulas. Remember to express the percent as a decimal.

APrt=?=$8,000=0.06=10

For quarterly compounding, n=4. There are 4 quarters in a year.

A=P(1+rn)nt

Substitute the values in the formula.

A=8,000(1+0.064)4⋅10

Compute the amount. Be careful to consider the order of operations as you enter the expression into your calculator.

A=$14,512.15

Answer 2

`A=\$14,555.17`

Explanation:

we know 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

`t=10\ years\\ P=\$8,000\\ r=6\%=6/100=0.06\\n=12`

substitute in the formula above

`A=8,000(1+(0.06)/(12))^(12*10)`

`A=8,000(1.005)^(120)`

`A=\$14,555.17`