Question

Phineas puts $800 into a certificate of deposit that earns 3.39%. If the money is compounded monthly, how much will it be worth in 3 years?
State your answer in terms of dollars, rounded to the nearest cent, but do not include a $ sign or the word "dollars" with your response.

Answer 1

It will be worth $885.51 in 3 years

Step-by-step explanation:

The formula for compound interest, including principal sum is:

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

• A is the future value of the investment/loan, including interest
• P is the principal investment amount  
• r is the annual interest rate (decimal)
• n is the number of times that interest is compounded per unit t
• t is the time the money is invested or borrowed for

∵ Phineas puts $800 into a certificate of deposit

∴ P = 800

∵  The rate of deposit is 3.39%

∴ r = 3.39% = 3.39 ÷ 100 = 0.0339

∵ The money is compounded monthly

∴ n = 12

∵ t = 3

- Substitute these values in the formula above

∴ $A=800(1+\frac{0.0339}{12})^{12(3)}$

∴ $A=800(1.002825)^{36}$

∴ A = 885.51407

- Round it to the nearest cent ⇒ hundredths place

∴ A = 885.51

It will be worth $885.51 in 3 years

Learn more:

You can learn more about the interest in brainly.com/question/3614284

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