Question

Heather plans to invest $5,000 for 8 years. Capitol Bank offers an 8 year CD at an annual rate of 5% using simple interest. How much is his invest worth at the end of the 8 years?

Answer 1

To calculate the value of the investment, we can use the formula: A = P(1 + rt). Given that the principal amount is $5,000, the interest rate is 5%, and the time period is 8 years, the investment will be worth $7,000 at the end of 8 years.

Step-by-step explanation:

To calculate the value of the investment, we can use the formula: A = P(1 + rt), where A is the final amount, P is the principal amount, r is the interest rate, and t is the time in years.

Given that the principal amount is $5,000, the interest rate is 5%, and the time period is 8 years, we can substitute these values into the formula:

A = 5000(1 + 0.05 * 8)

Simplifying the expression:

A = 5000(1 + 0.4)

A = 5000 * 1.4

A = $7,000

Therefore, the investment will be worth $7,000 at the end of 8 years.