2. An investment firm purchases a $65,000 CD from a bank at 2%. How much is the investment worth
(rounded to the nearest cent) at the end of 4 years if interest is compounded quarterly?

Respuesta :

Answer:

$70.399.62

Step-by-step explanation:

To find the final amount, we have to use the compound interest formula

A = P(1 + r/n)ⁿˣ

A = Final amount

P = Starting amount (65,000)

r = rate (0.02)

n = time applied (4 since it's quarterly, meaning 4 times every year)

x = years (4)

Our equation will look like this

A = 65,000(1 + 0.02/4)¹⁶

You should use a calculator to plug to solve 65,000(1 + 0.02/4)¹⁶

A = 70,399.62483294155

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