Suppose you have $2,000 and plan to purchase a 10-year certificate of deposit (CD) that pays 11.4% interest, compounded...
Suppose you have $2,000 and plan to purchase a 10-year certificate of deposit (CD) that pays 11.4% interest, compounded annually. How much will you have when the CD matures? $6,063.44 $5,886.84 $5,357.02 $7,299.68 $6,769.86
Homework Answers
Ans $5,886.84
| FV = | Future Value |
| PV = | Present Value |
| r = | rate of interest |
| n= | no of period |
| Compound Interest | |
| FV = | PV (1 + r )n |
| FV = | 2000*(1+11.4%)^10 |
| FV = | 5886.84 |
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Appendix A
You invest $3,000 in a certificate of deposit that matures after
eight years and pays 5 percent interest, which is compounded
annually until the certificate matures. Use Appendix A to answer
the questions. Round your answers to the nearest dollar.
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accumulate?
$
How much interest will you earn if the interest is withdrawn
each year?
$
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