Question

suppose you invest $2250 in a CD that earns 3% APR and is compound quarterly. the cd matures in 2 years. how much will this cd be worth at maturity

Answer 1

Pn = P0(1+r)∧n

Pnis future value of P0

P0 is original amount invested

r is the rate of interest

n is the number of compounding periods (years, months, etc.)

P(n) = 2250(1+(.03/4)∧8

** since the interest is compounding quarterly, you need to divide the rate by 4, the number of quarters in a year.

Then you would do the math.