Question

Cristiana uses $25,000 to purchase a 25 month cd (certificate of deposit) that pays 2.47% compounded monthly.

Answer 1

Maturity value = P(1 + r)^n; where P is the amount invested = 25,000, r is the rate = 0.0247/12 = 0.002058, and n is the the period = 25 months

Maturity value = 25000(1 + 0.002058)^25 = 25000(1.002058)^25 = 25000(1.053) = 26318.74

Therefore, maturity value is $26,318.74