Question

Dixie Bank offers a certificate of deposit with an option to select your own investment period. Jonathan has ​$7 comma 500 for his CD investment. If the bank is offering a 5 ​% interest​ rate, compounded​ annually, how much will the CD be worth at maturity if Jonathan picks a

Answer 1

Answer:

a. Two year investment period:

Future value = Amount * (1 + rate)^ number of years

= 7,500 * ( 1 + 5%)²

= $8,268.75

b. Five year investment period:

= 7,500 * (1 + 5%)⁵

= $9,572.11

c. Eight​-year investment​ period:

= 7,500 * ( 1 + 5%)⁸

= $11,080.92