Question

A certificate of deposit earns 1% interest every three months. The interest is compounded.

Answer 1

Answer:

Option C.

Step-by-step explanation:

The formula for amount after compound interest is

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

where, P is principal, r is annual rate of interest, r/n is per period interest, n is number of time interest compounded in 1 year, t is number of years.

Given information:

Principle : $P=35000$

Per period interest : $\frac{r}{n}=1\%=0.01$

Number of time interest compounded in 1 year : $n=4$

Number of years : $t=6$

Using the formula we get

$A=35000\left(1+0.01\right)^{\left(4\cdot6\right)}$

$A=35000\left(1.01\right)^{\left(24\right)}$

$A=44440.7126986$

$A\approx 44440.71$

The value of a $35,000 investment after 6 years is $44,440.71.

Therefore, the correct option is C.

Answer 2

A certificate of deposit earns 1% interest every three months. The interest is compounded.


What is the value of a $35,000 investment after 6 years?


$37,153.21

$39,438.88

$44,440.71

$56,295.30

A. 37,153.21