Question

Sophia gets a CD for $5000 for 5 years at 5.25% compounded quarterly. What’s the balance after 5 years.

Answer 1

Balance in 5 years = 6489.79 (to the nearest $0.01)

Explanation:

Future value

FP = P(1+i)^n

P=initial deposit=5000

i = interest per period=5.25/4

n = number of periods=4*5=20

FP

= P(1+i)^n

= 5000( 1 + 0.0525/4 )^20

= 5000*1.297958012811783

= 6489.79 (to the nearest $0.01)