Lori buys a $400 certificate deposit that earns 1.8% interest compounded monthly how much will a cd be worth in six years
1 answer:
Answer:
$1445.11
Step-by-step explanation:
The formula to use would be:
Where
F is the future amount (what we want to find)
P is the present (principal) amount (this is 400)
r is the rate of interest, monthly (1.8% or 0.018)
t is the time in months (6 years = 6 * 12 = 72)
Now substituting, we get:
After 6 years, the CD will be worth $1445.11
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So an exponential equation is gonna be used for this problem. The formula for such is 
, in which the a variable is the initial value and the b variable is the growth/decay rate.
For this situation, 1200 is gonna be your a variable since you've started out with it. And as for your b variable, its gonna be 107.3%, or 1.073, since it's increasing.
Your equation should look like this:
and from here just plug in 10 into the x variable and solve.
Multiply (1.073)^10 (don't round answers until the end), and take that answer and multiply it with 1200, your answer should be $2427.61.
For this situation, 1200 is gonna be your a variable since you've started out with it. And as for your b variable, its gonna be 107.3%, or 1.073, since it's increasing.
Your equation should look like this:
Multiply (1.073)^10 (don't round answers until the end), and take that answer and multiply it with 1200, your answer should be $2427.61.