Question

Nazerhy deposits $8,000 in a certificate of deposit. the annual interest rate is 6%, and the interest will be compounded quarterly. how much will the certificate be worth in 10 years? round your answer to two decimal places.

Answer 1

The worth of the certificate in 10 years would be $14,512.15

Compound Interest and Its Formula

Compound interest is the type of interest based investment that causes initially modest sums of money to eventually increase to big sums. The formula for compound interest is given by,

$A = P(1+\frac{r}{n})^{nt}$

Here,

A is the final worth of the investment

P denotes the Principal amount of money that is invested  

r denotes the rate of the compound interest

t denotes the time period in years  

n denotes the number of times interest is compounded in one year

Given Information

P = $8,000

r = 6% = 0.06

n = 4 (∵ Compounded quarterly)

t = 10 years

Solving for A

Substituting the values of P, r, n, and t in the above mentioned formula of compound interest, we get,

$A = 8,000(1+\frac{0.06}{4})^{4*10}$

$A = 8,000(\frac{4.06}{4})^{40}$

$A = 8,000* 1.8140184$

$A = 14,512.14726$

Rounding the answer to two decimal places, we get,

$A = 14,512.15$

Therefore, Nazerhy would get $14,512.15 after 10 years.

Learn more about compound interest here:

brainly.com/question/26457073

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