Question

A $2 million jumbo CD is paying a quoted 3.55 percent interest rate on 180-day maturity CDs. How much money will you have at maturity if you invest in the CD

Answer 1

Answer:

Maturity Value = $2,035,500

Explanation:

$2,000,000 are invested

Interest rate = 3.55 %

Time = 180 days

Maturity value = ?

Maturity Value = Amount invested * [1 +( interest * no of days to maturity/360)

Maturity Value = $2,000,000* [1 + (0.0355*180) /360)

Maturity Value = $2,000,000* [1 + (6.39/360)

Maturity Value = $2,000,000* [1 +  0.01775]

Maturity Value = $2,000,000 * 1.01775

Maturity Value = $2,035,500

Note: A Certificate of deposit is an interest bearing time deposit.