Question

Savanna Smiles invested $5,000 for one year in a CD that earns interest at a rate of 3.5% compounded monthly. What is the interest earned during the year? (Hint: Use the appropriate formulas and round at the end.)
A. $198.70
B. $145.92
C. $177.83
D. $162.97

Answer 1

We are asked to solve for the interest during the year given that it is compounded monthly, we are given with the formula A = P(1+r)^n. The solution is shown below;
A = P (1+r)^n
A = $5,000 (1+ 3.5/12)^(12*1)
A = $5,000 (1.000292)^12
A = $5,177.84

Hope this helps!

Answer 2

C, is the answer! :)