Question

Harvey Alson invested $7,500 in a 2-year CD that pays 6% interest compounded quarterly. What is the amount of interest that Harvey will earn when the CD matures?

Answer 1

Answer:

The answer is $948.75.

Step-by-step explanation:

P = 7500

t = 2

r = 6% or 0.06

n = 4 (quarterly means 4 times in a year)

Now, compound interest formula is given as :

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

Now putting these values in the formula, we get

$A=7500(1+\frac{0.06}{4})^{4*2}$

=> $A=7500(1.015)^{8}$

A = $8448.75

So, interest earned will be = $8448.75-7500=948.75$ dollars

The answer is $948.75.

Answer 2

A=7,500×(1+0.06÷4)^(4×2)
A=8,448.69

Interest earned=8,448.69−7,500
Interest earned=948.69