176k views
3 votes
Kelly invested $5,000 in a CD at Charter Bank. The annual rate is 4.9% compounded monthly. How much is her investment at the end of 8 years?

1 Answer

7 votes

Answer:

$7393.78

Explanation:

The formula for the value of Kelly's investment is ...

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

where P is the principal invested (5000), r is the interest rate (.049), and t is the number of years (8). n is the number of times per year interest is compounded. When compounding is monthly, n=12.

Filling in the numbers, we find ...

V = $5000·(1 +.049/12)^(12·8) ≈ $7393.78

Kelly's investment will be worth $7393.78 in 8 years.

User SaltyEgg
by
7.5k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories