Question

Suppose you buy a CD for $500 that earns 2.5% APR and is compounded quarterly. The CD matures in 3 years. How much will this CD be worth at maturity?
A. $512.62
B. $538.82
C. $512.64
D. $504.18

Answer 1

We're going to use the compounded intrest formula:

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

Where P is the initial cost
r is the rate as a decimal
n is the amount per year that you invest the rate
t is the amount of time at which you're checking how much it's worth (yrs)

Using this information, we can use:

$A = 500(1+\frac{0.025}{4})^{3*4} \approx 538.82$

So your answer will be B.

Answer 2

Answer:

$538.82 -_- APEX

Step-by-step explanation: