Answered

Suppose you invest $2250 in a D that earns 3% APR and is compounded monthly. The Cd matures in 2 years. How much will this CD be worth at maturity?

Answer :

Answer:

$2388.95

Step-by-step explanation:

  • Principal, P= $2250
  • Annual Interest Rate, r= 3% =0.03
  • Time, n= 2 years
  • Since it is compounded monthly, Period, k= 12 Months

The worth of a compound deposit after a period of n years is calculated using the formula:

[tex]A(n)=P(1+\frac{r}{k})^{nk}[/tex]

[tex]A(2)=2250(1+\frac{0.03}{12})^{12 \times 2}\\\\=2250(1+0.0025)^{24}\\=2250(1.0025)^{24}\\=\$2388.95[/tex]

At maturity, the deposit will be worth $2388.95.

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