Question

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

Answer:

The value of the CD at the end of the 4 years is $ 24,781.

Step-by-step explanation:

Given,

P = $ 8,000

R = 4.1 %

T = 4 years

We know that,

    A = $P(1+\frac{R}{100})^{T} + P$

⇒ A = $10,000 ( 1+\frac{10}{100} )^{4.1} + 10,000$

       = $10,000 ( 1+\frac{1}{10} )^{4.1} + 10,000$

       = $10,000 ( \frac{11}{10} )^{4.1} + 10,000$

       = $10,000 (1.1)^{4.1} + 10,000$

       = 10,000 × 1.4781 + 10,000

       = 14,781 + 10,000

       = $ 24,781

The value of the CD at the end of the 4 years is $ 24,781.