Question

Lili has saved $2,500 money from her part time job at a bakery. Since she will not need this money for a few years, she decides to put the money in a 3-year CD (Certificate of Deposit) at a local credit union. The credit union offers Lili 2.75% APR, compounded quarterly. How much will Lili's CD be worth at the end of the 3 years?

Answer 1

Lili's CD be worth at the end of 3 years is $2714.23

Explanation:

Lili deposit $2500 at the Annual percent rate 2.75% and for 3 years compounded quarterly.

Let's use formula

A = p
`(1+(r)/(n) )^(n*t)`

From the given information

p=2500

r =0.0275

t=3

n=4

Plug in these values into the formula

A=2500
`(1+(0.0275)/(4))^(4*3)`

Simplify the right side of the equation,

A=$2714.23