Question

Mr. Clopu buys an 18-month CD that pays 434% simple interest for $5,000. Find the value of the CD at the end of its term.

Answer 1

Answer:

FV= $5,325.8

Step-by-step explanation:

Giving the following information:

Mr. Clopu buys an 18-month CD that pays 4.34% simple interest for $5,000.

To calculate the future value, we need to use the following formula:

FV= (P*r*t) + P

P= $5,000

r= 0.0434/12= 0.00362

t= 18

FV= [(5,000*0.00362)*18] + 5,000

FV= $5,325.8

Answer 2

The value of the CD at the end of its term is $39,060

Given:

Time = 18 month

Principal = $5000

Interest rate = 434%

Future value = ?

Future value = Principal × Rate × Time

= 5,000 × 434% × 18

= 5000 × 434/100 × 18

= 5000 × 4.34 × 18

= 39,060

Therefore, the value of the CD at the end of its term is $39,060

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