Answer:
<u>The junior class will receive US$ 1,479.77 when it cashes in the Certificate of Deposit.</u>
Step-by-step explanation:
1. Let's review the data given to us for answering the question:
Amount invested in the Certificate of Deposit = US$ 1,400
Duration of the CD = 18 months
Interest rate = 3.7% compounded monthly
2. Let's find the future value of the Certificate of Deposit after 18 months, using the following formula:
FV = PV * (1 + r) ⁿ
PV = Amount invested = US$ 1,400
number of periods (n) = 18
rate (r) = 3.7% = 0.037 annually or 0.003083 monthly
Replacing with the real values, we have:
FV = 1,400 * (1 + 0.003083) ¹⁸
FV = 1,400 * (1.003083) ¹⁸
FV = 1,400 * 1.056978
FV = US$ 1,479.77 (Rounding to the nearest cent)
<u>The junior class will receive US$ 1,479.77 when it cashes in the Certificate of Deposit.</u>
