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Given that Kyle has received 900$ in cash as a gift and Kyle wants to invest that money in CD with 4% compound interest which is being compounded annually.
That means interest rate = 4% = in decimals.
Since interest is compounded annually, we have to use compound interest formula.
That is amount after time t is
Where P- initial amount = 900
r= rate of interest in decimals = 0.04
n= number of times interest is compounded per year = 1
t= number of years the money is invested = 5
Hence A =
= $1094.9876
So, at the end of five year period, Kyle will have 1094.9876$ to put down in his car.