Question

Present and future value tables of $1 at 3% are presented below PVAD $1 FVA $1 PVA $1 FVAD $1 FV $1 PV $1 1.00000 1.03000 0.97087 0.97087 1.0300 1.0000 1 1.06090 0.94260 2.0909 1.97087 2.0300 1.91347 2.91347 1.09273 0.91514 3.1836 3.0909 2.82861 3 3.82861 0.88849 4.3091 1.12551 3.71710 4 4.1836 4.71710 1.15927 0.86261 5.3091 5.4684 4.57971 5 1.19405 0.83748 6.6625 5.57971 5.41719 6 6.4684 6.41719 7.6625 6.23028 7.8923 1.22987 0.81309 7 7.23028 9.1591 1.26677 0.78941 8.8923 7.01969 8 8.01969 1.30477 0.76642 10.1591 7.78611 10.4639 11.8078 8.78611 8.53020 1.34392 0.74409 11.4639 10 9.25262 13.1920 9.53020 1.38423 0.72242 12.8078 11 14.6178 10.25262 16.0863 10.95400 14.1920 9.95400 1.42576 0.70138 12 15.6178 10.63496 1.46853 0.68095 13 17.5989 11.63496 17.0863 11.29607 1.51259 0.66112 14 1.55797 0. 64186 11.93794 19.1569 12.29607 18.5989 15 20.7616 12.93794 20.1569 12.56110 1.60471 0.62317 16 Today, Thomas deposited $180,000 in a 4-year, 12 % CD that compounds quarterly. What is the maturity value of the CD?

Answer 1

We use the formula:
A=P(1+r/4)^4n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=$180,000*(1+0.12/4)^(4*4)

=180,000*1.60471

=$288847.80