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42 votes
42 votes
A certificate of deposit earns 0.75% annual interest every three months. The interest is compounded. What is the value of a $32,000 investment after 5 years?

A. $33,221.62
B. $37,157.89
C. $43,099.36
D. $57,795.56​

User MartinStettner
by
3.1k points

1 Answer

12 votes
12 votes

Answer:

Given that certificate of deposits earns 0.75% interest every three months, the value of $25,000 after 8 years will be:

A=P(1+r/100)^nt

where:

A=amount

P=principle

r=rate

t=time

n=number of terms

thus:

from the infomation

$25000, r=0.75%, t=8 years, n=12/3=4

thus

A=25000(1+0.0075/100)^(4*8)

A=25000(1.0075)^32

A=$3175.28

Explanation:

User Zygimantus
by
3.3k points