Homework Answers
amount to be invested $8750
interest rate, i = 2.45%
duration, y = 9 years
to calculate the worth of CD when it matures we need to calculate the FVAF, future value of annuity for $8750
thus on maturity Mary will receive (8750* FVAF (2.45%,9)) = 8750 * 9.934 = $86925
present worth of that amount however would be $86925 * PVF (2.45%,9)
86925*0.804 = $69910
that means the amount she will receive after 9 years will worth $69910 to her now
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