Answer :
Answer:
The maturity value of the CD is $164,680
Explanation:
The Maturity value of CD is the compounded value of the principal invested in the CD at a specified interest rate.
Use the following formula to calculate the maturity value of CD
Future value = Present value x ( 1 + Periodic Interest rate )^numbers of compounding periods
Where
Present value = Principal Invested = $130,000
Periodic Interest rate = 12% x 3/12 = 3%
Numbers of compounding periods = 2 years x 12/3 = 8 periods/quarters
Future value = Maturity value of the CD = ?
Placing values in the formula
Maturity value of the CD = $130,000 x ( 1 + 3% )^8
Maturity value of the CD = $130,000 x 1.266770081
Maturity value of the CD = $164,680.11
Maturity value of the CD = $164,680 ( Rounded to whole number )