Question

Heather invested $8,000 in a 4-year Certificate of Deposit (CD) that pays 4.1% interest compounded annually. What is the value of the CD at the end of the 4 years? *

Answer 1

Step-by-step explanation:

equation: A=P(1+i)^n

p=amount- 8000

i=interest in %- 4.1/100

n= no. of years- 4

A= 8000(1+0.041)^4

A= 8000×1.17436450976

A= 9394.916

Interest = 1394.916

TOTAL AMOUNT RECEIVABLE = 9394.916

Answer 2

Given :- Heather invested $8,000 in a 4-year Certificate of Deposit (CD) that pays 4.1% interest compounded annually. What is the value of the CD at the end of the 4 years ?

Answer :-

we know that, when rate is compounded annually ,

• A = P[1 + (R/100)]ᵀ
• CI = A - P

Where,

• A = Amount .
• P = Principal .
• R = Rate of interest per annum .
• T = Time .
• CI = Compound interest .

so, putting values we get,

→ A = P[1 + (R/100)]ᵀ

→ A = 8000[1 + (4.1/100)]⁴

→ A = 8000[1 + (41/1000]⁴

→ A = 8000 * (1041/1000)⁴

→ A = 8000 * (1.041)⁴

→ A = 8000 * 1.174

→ A = $9392 (Ans.)

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